Business Partnerships and Their Advantages

The Partnership is a very common kind of ownership of smaller firms with a single owner. Partnership as a kind of property offers a few tax advantages, however, is less favored as a corporation because of the liability component. Regardless of their position or ownership of the company, almost all members are responsible in individual capacity.

Let us find out about the 3 kinds of partnerships in particulars.

General Partnership
Probably the simplest and most fundamental type of partnership, joint partners are fully liable for all transactions made by the partner company. For example, if A and B are partners and deals with one (for example A deals), and finally defaults with a third party, it is not just A who is responsible for fixing the damage, B is every bit responsible, even going so far like selling his property to settle the injured party.


This clause of the agreement the company makes it dangerous. There is a break in the form of tax cost savings which is important in each spouse's income and not returns. General partner actively involved in program management and decision making of the company.

Limited Partnership
Not all partners in the partnership agreement are in the same capacity. Restricted partners would be non-active types who do not participate in management or decision-making. But I'm not saying that they have absolutely no say at all. They are primarily investors who simply put in their funds and collect revenue.

Very clearly, the company's partnership should have a number of common partners. In case of default or lawsuit, the limited partners individual resources are not at risk, that is why limited partners probably will state its position before investing in a business.

Limited Liability Company (LLC)
As mentioned above, in a general partnership, not all members may participate as limited partners. However, LLC is actually a type of partnership that allows almost all the partners to go as limited partners. LLC is quite similar to corporations. The good thing about LLC is the fact that one partner is not responsible for the actions of the other spouse.

LLC is actually a much more versatile type of company and well suited for small businesses that do not require excessive funds. Companies usually start as a general partnership or LLC and proceed towards company once it has expand.