Partnership FAQ

Questions:

• What is a partnership and how do I create one?
• Are there special rules for running partnerships?
• Is a written partnership agreement required for every partnership?
• How are partnerships taxed?
• Are owners of a partnership personally liable for business debts?
• What happens if one partner wants to leave the partnership?
• What are the differences between a partnership and a limited liability company?
• What is the difference between a general partnership and a limited partnership?

Answer:

What is a partnership and how do I create one?

A partnership is a business owned by two or more people that hasn't filed papers to become a corporation or a limited liability company (LLC). You don't have to complete any paperwork to create your partnership -- the arrangement begins as soon as you start a business with another person.

Although the law doesn't require it, many partners work out the details of how they will manage their business in a written partnership agreement. If you don't create a written agreement, the partnership laws of your state will govern your partnership.