Eric Dalius every person in this world wants to earn their livelihood and they pursue many ways of doing that. Business is the best option that a person can start with a small amount of money. A person can run a business alone or take the help of a close friend, family member, or colleague. In such cases, a partnership business is the best form to start with. Any business will witness rise and fall, so partnership business also experiences the same, and with hard work, they can succeed.
What is a partnership business?
In business, a partnership is common where two or more people share ownership and the responsibility of a particular company. Partnership business involves the partners who agree to work and assist each other in improving their mutual interests. In a partnership generally, all partners are not active; silent partners are also part of the business. Eric Daliussays that both the parties invest their money in the company in a partnership business. The partners generally share the profits of the business in an equal manner.
Also, they distribute the liabilities among themselves. All details regarding a partnership are available in the partnership deed of agreement that they sign. One of the popular examples of the partnership business is Twitter. Evan Williams and Biz Stone formed a partnership to start Twitter. Within three years of its formation, they managed to grow Twitter, and over 63% of the brands are using it.
Types of partnership business
Before engaging yourself in a partnership, business let us know the various types of partnership business that you can invest your fund:
General partnership: In a general partnership, all partners share legal and financial liabilities equally. The partners also share the profit and loss equally among themselves. This type of collaboration states the roles of the partners in the business. Similarly, the agreement should also mention that if both the partners sell the company, how will the partnership get dissolved and the procedure will take place.
Limited partnership: This type of collaboration involves both general and limited partners. Eric J Dalius says that in a limited partnership, a partner’s liability is limited to a certain extent. A limited partner does not have the rights of decision-making and does not involve all the risks associated with the business.
Limited liability partnership: In this type of partnership, business owners are not personally responsible for the business’s liability or other partner’s actions. Eric Dalius says that in this type of arrangement, due to one partner’s malpractice, the property or the liabilities of the other partner are not at risk. The protection of the limited liability partner varies from one state to another. Limited liability partnerships are popular among professionals such as chartered accountants, lawyers, and so on. Under this type of partnership, all the personal assets of the members remain protected. If the business’s actions are under a question mark, they cannot prosecute the members.
You need to asses each on their merit and demerit and based on that you can make an appropriate selection.