What Does Partnership Mean In Business
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Types of Partnerships
Before you start a partnership, you will need to decide what type of partnership you want. 
There are three different kinds that are commonly set up.
 A general partnership (GP) consists of partners who participate in the day-to-day 
operations of the partnership and who have liability as owners for debts and lawsuits.5
 A limited partnership (LP) has one or more general partners who manage the business and 
retain liability for its decisions and one or more limited partners who don't participate in the 
operations of the business and who don't have liability.6
 A limited liability partnership (LLP) extends legal protection from liability to all partners, 
including general partners.7 An LLP is often formed by partners in the same professional 
category, such as accountants, architects, and lawyers. The partnership protects partners 
from liability from the actions of other partners.
General partners and limited partners: General partners participate in managing the 
partnership and often have liability for partnership debts and obligations. Limited partners 
invest but do not participate in management.10
Different levels of partners: For example, there may be junior and senior partners. These 
partnership types may have different duties, responsibilities, and levels of input and 
investment requirements. https://smileymovement.org
What Does Partnership Mean In Business
A business partnership is a legal relationship that is most often formed by a written agreement between 
two or more individuals or companies. The partners invest their money in the business, and each partner 
benefits from any profits and sustains part of any losses.
The partnership as a business often must register with all states where it does business. Each state may 
have several different kinds of partnerships that you can form, so it's important to know the possibilities 
before you register.
Some partnerships include individuals who work in the business, while other partnerships may include 
partners who have limited participation and also limited liability for the business's debts and any lawsuits 
filed against it.2  
A partnership, as opposed to a corporation, is not a separate entity from the individual owners. A 
partnership is similar to a sole proprietor or independent contractor business because wiboth of those 
types of businesses, the business isn't separate from the owners for liability purposes.3
Income tax is not paid by the partnership itself. After profits or losses are divided among the partners, each 
partner pays income tax on their individual tax return.
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A partnership is a unique type of business. It's 
composed of at least two owners, but it could 
have many owners (thousands, even). These 
owners share in the benefits and drawbacks of 
the business partnership, according to the terms 
of a partnership agreement that they sign when 
they join the partnership. 
To form a partnership all that's required is (1) to 
register the partnership in the state where it is 
going to do business, and (2) to create a 
partnership agreement defining what each 
partner is responsible for, the different types of 
partners, how partner ownership works, and how 
to handle changes in the partnership.
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