Business partnerships can be formed in order to achieve various business goals and aims. They often allow persons to share in different business enterprises and can offer many benefits for businesses. In a partnership, each partner is allowed a certain amount of control over the partnership operations, as well as the business profits. They may also be subject to equal business risks as well, unless it is a limited partnership, limited liability partnership, or limited liability limited partnership.
Generally speaking, any person can be a partner in a partnership. A partnership is formed simply when two or more persons decide to get together and agree to do business together for profit. People can become business partners either by:
- Formal written and signed partnership agreements
- Oral agreements
- By default (that is, their actions define their status as business partners)
Lastly, corporations can also become partners, since state laws allow corporations to act as individuals.
What Are the Privilege and Duties of a Partner?
Each partnership is different in terms of the privileges and duties of each party. Ideally, these terms will be specifically dictated in the partnership agreement. In general, duties of partners may include:
- Managing day-to-day affairs of the business
- Ensuring that the business remains profitable
- Contributing property and assets to the business as required
- Being liable for losses incurred by the partnership
Privileges of partners may include:
- Having a share in the profits of the partnership activities
- Being able to contribute to important business decisions
- Receiving shares of the overall asset and property distribution when dissolving a general partnership
How Do Taxes Work in a Partnership Setting?
In terms of tax liability and duties, each partner is usually individually responsible for paying taxes on their own separate shares of income from the partnership activities. That is, the partnership does not pay taxes as an entity.
Do I Need a Lawyer for Help with Partnership Laws?
Partnership laws can often be quite complex, even for simpler partnership arrangements. You may wish to enlist the services of a qualified business lawyer in your area if you need help with any partnership issues. Your lawyer can guide you through any issues regarding stages such as partnership formation, operation, and dissolution. Also, your lawyer can help represent your own individual interests in the event that you need to be involved in a partnership lawsuit.