Overview
When two or more persons come together to run a
business, a partnership is said to be formed. There are many kinds of
business partnerships. There will be many general partners who equally
share the profits and losses and take decisions on a win-win basis. Some
businesses may be run by limited partners, who provide capital for the
business and share the profit, but they have no control over the
operations of the business. In the case of limited liability partnership
(LLP), all partners have limited liability for the debts incurred
during the operation of the business. Unlike general partners and sole
proprietors, their personal property and income are distinguished from
their business assets. So, their personal property cannot be used meet
business liabilities.
How it Works
Firstly, you need to find potential individuals who are ready join your business as partners. Then, hire a lawyer to draw up a partnership agreement so that no partner is ever in doubt about his or her business obligations. Also, consider having each partner file a DBA or an "assumed name" to make it easier to operate under the business' name.Benefits
Business partnership has a lot of benefits over the sole proprietorship. The most important is that the work burden is shared. All the partners of the business have an equal share in the business. However, if the partnership agreement specifies some percentage split of financial liabilities and profits that a partner gets, then it varies.In case of a limited partnership, there must be at least one general partner who is financially responsible for the business, and there can be one or more limited partners. The limited partners are mostly called silent partners, but they also invest in the business and enjoy profits earned. Limited partners are less liable for the expenses than the general partners. The amount these people lose will be proportional to the amount they invest, while the general partner's property can be at risk, if the business runs into loss. The aim of having any number of limited partners contributing capital to the company is clearly the benefit of forming a business partnership.