Partnership

Definition

A partnership is a business organization in which the owners are mutually responsible for management and liability.

Purpose

Partnerships allow two or more individuals or entities to share ownership and management responsibilities, pooling their resources and expertise to operate a business. This structure provides flexibility and shared decision-making.

Examples of Use

• Law Firms: Commonly organized as partnerships to share management responsibilities and profits among partners.
• Accounting Firms: Partners share the workload, decision-making, and profits of the firm.
• Small Businesses: Entrepreneurs may form partnerships to combine skills, capital, and resources for mutual benefit.

Related Terms

• General Partnership: A partnership where all partners share management responsibilities and liability equally.
• Limited Partnership: A partnership with both general and limited partners, where limited partners have restricted liability and involvement in management.
• Joint Venture: A temporary partnership formed for a specific project or business purpose.

Notes

• Agreement: A partnership agreement is crucial to outline the roles, responsibilities, and profit-sharing arrangements among partners.
• Liability: In a general partnership, partners are personally liable for business debts and obligations.