A general partnership is a business owned by two or more people who are personally liable for all business debts and often share in all business profits. To form a partnership, each partner contributes capital or labor in exchange for an ownership percentage.
Partnerships are very easy to establish.
They are similar to sole proprietorships, except you own the business together with another party or several other parties.
No registration is required with any government agency to create a partnership.
A well written partnership agreement between partners can define ownership percentages, the division of profits and losses, and what happens if a partner dies or becomes disabled. Documenting such things is very helpful in establishing a partnership.
Partnerships themselves do not pay federal or state income taxes. Instead, profits are passed through to partners who report and pay income taxes on their personal returns.
