partnerships

Partnerships are business arrangements in which two or more people operate a business as co-owners with the goal of earning profits. They are recognized as a distinct form of business organization in many jurisdictions and typically involve shared ownership, profits, and management responsibilities, though the exact structure depends on the governing agreement and law.

Common forms include general partnerships, where partners manage the business and bear unlimited personal liability; limited partnerships, with general partners who manage and have liability, and limited partners who contribute capital and have liability limited to their investment; and limited liability partnerships, which shield partners from most liabilities arising from others’ activities.

Partnerships arise from a contract such as a partnership agreement or articles of partnership. The agreement generally covers ownership shares, profit and loss allocations, voting rights, capital contributions, admission of new partners, dispute resolution, and dissolution. Fiduciary duties, such as loyalty and care, often apply to partners.

Tax treatment usually follows pass-through rules, with profits and losses reported by individual partners rather than taxed at the entity level. Specific rules depend on local law and the partnership form.

Advantages include flexible governance, simple formation, and tax transparency. Disadvantages include potential unlimited liability for general partners, risk of disputes, and possible dissolution if a partner leaves or funds are insufficient. Strategic partnerships and joint ventures are related arrangements focused on a shared objective rather than ongoing ownership.

Dissolution occurs on withdrawal, agreement, or as a result of insolvency or termination of the partnership purpose. Winding up involves settling debts and distributing remaining assets, and may require buyouts or reorganization.