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A partnership business is a formal arrangement between two or more individuals, companies, or entities who agree to jointly operate and manage a business, share its profits, and bear its risks. Each partner contributes resources, such as capital, skills, or labor, and the rights and responsibilities of the partners are usually outlined in a partnership agreement.
Legal Definition (General Overview):
A partnership is defined as a voluntary association of two or more persons to carry on a business for profit as co-owners, typically governed by partnership laws and the terms of the partnership agreement.
Key Points in the Definition:
Collaboration:
Partnerships involve teamwork where individuals work toward a common business goal.
Profit Objective:
The primary aim is to generate and share profits, though the arrangement may also include sharing losses.
Joint Ownership:
Partners co-own the business and share management responsibilities unless otherwise agreed.
Agreement:
While not always required in writing (depending on jurisdiction), a partnership agreement provides clarity on roles, contributions, profit-sharing ratios, and conflict resolution.
Liability:
Partners may have unlimited or limited liability depending on the type of partnership structure chosen .
Pervious Class: