What is a Partnership?

The most common partnerships are: 

GENERAL PARTNERSHIP 

• A general partnership is an arrangement between two or more people to oversee business operations and share its profits and liabilities. 

• Each partner has the authority to make business decisions as they have a joint equal say in the business and manage the day-to-day operations of the business. 

• Partners must agree to unlimited liability. This means that they are equally fully liable for all the company’s financial and non-financial liabilities and take on personal responsibility for the business and cannot shield their personal assets from legal claims or debts incurred by the business. 

• There's no legal requirement for a contract or written agreement when you enter a general partnership, but it's best to formalise the details of the arrangement in a written partnership agreement. 

LIMITED PARTNERSHIP 

• To be considered a limited partnership, the business must have at least one general partner and at least one limited partner 

• A limited partnership is also a type of business partnership that requires two or more partners. 

• Limited partnerships are particularly applicable to businesses that have high startup costs or ventures that typically require investment from multiple parties. 

• All limited partners, sometimes known as “silent partners'', will serve solely as an investor in the business, with the funds that they contribute being the extent of their liability. They are not involved in the day-to-day operations and management of the company 

• Limited partners are not personally liable for the debts or lawsuits of the company. However, the limited partner will lose money if the business fails 

• Every limited partnership must have a partnership agreement. This is an agreement between partners that establishes a limited partnership and governs the terms and conditions of the partnership relationship.