There are three basic forms of partnerships: A general partnership, a limited partnership and a joint venture. But first, partnerships generally are contractual arrangements among two or more people with the purpose of engaging in some business venture. They are not business entities! They are contracts. And as such, a different set up laws applies.
General Partnership: This is a situation where all partners are treated the same for liability purposes. Because it is a contractual arrangement, there is NO liability protection and all partners are generally considered jointly and severally liable for debts and obligations of the partnership. That is they are liable as a group and as an individual for the whole amount.
Limited Partnership: In a limited partnership, there is a distinction among the partners. Some are limited partners and some are general partners. The difference is that the limited partners are NOT liable for the debts and obligations of the partnership. The general partner, however, is liable. There must be at least one general partner in the limited partnership.
Joint Venture: A joint venture works differently than a partnership. See more discussion on the Joint Ventures page.
AS LIABILITY ISSUES DIFFER, PLEASE CONSULT AN ATTORNEY BEFORE PROCEEDING TO ESTABLISH A PARTNERSHIP OR JOINT VENTURE.
THIS INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. PLEASE CONSULT AN ATTORNEY AND TAX ACCOUNTANT BEFORE FORMING ANY BUSINESS RELATIONSHIP.