- General partnership is the "handshake" form of business organization.handschlag image by Dron from Fotolia.com
General partnerships are a default form of two or more people working together for a common goal or business venture. General partnerships do not require any legal background or formal written agreements---just the act and intent of two or more people working together for a common business venture is enough.
- In a limited partnership, a general partner bears most of the risk and responsibility.investment risks image by Pix by Marti from Fotolia.com
Limited partnerships limit various partners' power in the management and control of the business. A general partner in this form of partnership maintains management and control---and carries the weight of business risks. Others may be named as limited partners.
Limited Liability Partnership (LLP)
- Limited liability partnerships limit the risks of all partners.partnership image by Dmitri MIkitenko from Fotolia.com
Limited liability partnership, known as LLP, is a legal business structure that requires legal documentation with the state where the business operates. Essentially, an LLP works exactly like a general partnership (where each partner has management and control over the business), but limits the risk of all partners.
Limited Liability Company (LLC)
- Limited liability companies are a flexible, informal version of a corporation - but require legal documentation.handsome managers image by Andrey Kiselev from Fotolia.com
Limited liability companies, known as LLCs, function more like corporations than partnerships. This type of structure requires legal documentation of the management structure of the business, but risks to the partners are very limited, much in the same ways a corporation limits liability of its shareholders.
- Joint ventures are a partnership for a single transaction or project.business colleagues preparing for business meeting image by Vladimir Melnik from Fotolia.com
A joint venture is designed to combine the resources of two individuals or businesses to achieve a defined common objective for a limited amount of time.
Which Partnership Should I Choose?
- Consult an attorney or business development consultant to determine which partnership is appropriate.business woman talk to cell phone on business building image by Anatoly Tiplyashin from Fotolia.com
It is best to consult an attorney or business development consultant to determine which form of partnership is appropriate for your business. An attorney can assist you and your partner(s) with appropriate documentation to clarify roles and protect all business partners as well as plan for any future business partnership decisions.