Partnerships can be defined as an enterprise where two or more individuals come together to do business for profit. Unlike other forms of businesses, partnerships are somewhat easier to form and have fewer requirements for formation. Partnerships can be formed in three main ways:
- Formally through written partnership agreement documents and registering with the appropriate state entities
- Informally, through oral agreement
- By default, i.e., partnership being inferred from the parties’ conduct with one another
Basically, any person who is legally able and competent to make decisions on their own may be allowed to become a partner. This may also require the person to be of legal age. In many cases, corporations can be considered business partners, since corporations are granted the status of individual under state and federal laws.
How Long Do Partnerships Last?
Partnerships last as long as the partners are all competent and able to perform their duties as a partner. Thus, if one partner dies, or becomes ill/incapacitated, the partnership may be subject to dissolution. Partnerships can also be terminated by agreement of all the partners, or by operation of law (for instance, if the partners were found to be violating business laws).
However, not all partnerships are immediately dissolved upon the loss of one partner. For instance, with a limited partnership, or LP, the withdrawal of a limited partner does not immediately result in dissolution of the partnership. This is because limited partners do not participate in the overall management of the partnership. However, if a general partner cannot continue, it could result in the dissolution of the partnership arrangement.
What Is Personal Liability in a Partnership?
In a partnership, partners are personally liable for any debts, losses, or obligations associated with the partnership. That is, the partnership is not responsible for these as a whole; instead, each partner is responsible for their share of losses and debts, etc. For instance, if the partnership cannot come up with repayments on a loan, the lender can pursue the personal assets of an individual partner or partners in order to obtain compensation for the loan. Liability may be different for limited partners in an LP or an LLP.
Do I Need a Lawyer for Help with Partnership Requirements?
As you may be able to tell, partnership requirements and liability for partners can often vary depending on the issues at hand. You may need to hire a business lawyer if you need assistance with partnership laws, or any business issues in general. Your attorney can provide you with legal guidance and can also represent you in the event that a lawsuit needs to be filed on your behalf.