partnership

A partnership is a cooperative relationship between two or more individuals or organizations who share in the profits and losses of a business venture. It can refer to informal arrangements or formalized legal structures recognized by law. Partnerships are commonly used to pool resources, share expertise, and distribute risk, but the specific rights and obligations of partners depend on the governing agreement and applicable jurisdiction.

Common forms include general partnerships, limited partnerships, and limited liability partnerships. In a general partnership, all partners typically participate in management and share unlimited personal liability for debts. A limited partnership includes both general partners, who manage the business and assume liability, and limited partners, who contribute capital and have liability limited to their investment. A limited liability partnership offers some protection against the actions of other partners, insulating individual partners from certain liabilities, but management duties remain a matter of agreement and law.

Formation and governance are usually governed by a partnership agreement, which can be a written document or an oral arrangement in some cases. The agreement outlines profit sharing, responsibilities, decision making, admission of new partners, and dissolution procedures. Partners generally owe each other fiduciary duties of loyalty and care, and accounts are kept to ensure fair distribution of profits and losses. Taxes often pass through to the partners, with income reported on individual tax returns in many jurisdictions.

Dissolution can occur by agreement, at the end of a term, or due to withdrawal or insolvency. Partnerships offer flexibility and simplicity but may entail unlimited liability for some partners and potential conflicts, making clear governance structures and exit plans important.