Partnerships

By definition, a partnership is a business that has more than one owner and has not filed papers with the state to become a corporation or an LLC (or a limited partnership or limited liability partnership). So anytime you have  two or more entrepreneurs in a business venture together who haven't done anything to formalize their business arrangement, you’ve got a partnership.

There are two different kinds of partnerships: general partnerships and limited partnerships. Most small businesses are general partnerships which means that all the partners are general partners. General partners are personally liable for the business debts of the partnership and any general partner can bind the partnership to a contract or business deal.

A limited partnership is a very different arrangement and much less common with small businesses. Limited partnerships must have at least one general partner and one limited partner. General partners have the same role in a limited partnership as in a general partnership: they control the company's day-to-day operations and are personally liable for the partnership's debts. Limited partners, on the other hand, contribute financially to the partnership but have minimal control over the business's operations and normally can't bind the partnership to business deals or be held personally liable for partnership debts.  

The articles and material in this section deal primarily with general partnerships since these are the most common form of partnership for small businesses.