Business partnerships can be of many types. However, the two most common types are limited partnership and common-law partnership. A partnership is a legal agreement where two parties, called business partners, agree together to pursue their own individual interests. Partnerships can be between individuals, companies, businesses, public organizations or groups.
Limited partnerships are one of the most common forms of business partnerships today. The limited partnership agreement contains the general terms and conditions of the partnership, such as the partnership’s name, its duration, the property and assets owned by the partners and other pertinent information. The partners will also decide on the management of their personal assets during the course of the partnership, which could include control of investments, if any. In addition, the partners have the right to bind their respective partners to refrain from disinheritance, to share in the partner’s marital assets, and to not compete against one another.
Other common forms of partnerships are proprietorship and sole proprietorship. A sole proprietorship is a sole partnership in which one person owns all the business assets. This form of business entity differs from a partnership because there is no requirement for any performance of partnership obligations or the sharing of profit or loss among the partners. A sole proprietorship usually exists for the benefit of one person. A partnership, on the other hand, may be created for the benefit of many people; however, the individuals benefiting from the partnership must share in the partnership’s profits or the losses of any other partners.
Another type of partnership agreement is a double partnership. This form of partnership occurs when two or more people are equally involved in the partnership. For instance, a partnership in which both partners are doctors could be called a partnership physician-owner. A partnership could also be between two business entities, such as a partnership automobile manufacturer and a dealer.
Partnerships also differ in their status as to what they are allowed to do with their profits or losses. Partnerships can share in the profits or loss of the partners. Partnerships that are owned by one partner do not have these rights. The partnership itself may be called a partner but it is still considered to be two people who share in the losses and profits. If one partner defaults on the payments for the partnership’s debts, the remaining partner will take over management of the business and its assets until the partner pays off the debts.
Partnerships have become very popular in our day and age. Many different partnerships have been created and there are many different types of partnerships. However, before a business forms any partnership, it must first obtain a power of attorney or otherwise known as a license, from the state or county in which it is located. In many cases, when the business is incorporated as a corporation, it must also file an instrument of incorporation which lists the names of all partners that will be participating in the partnership.