A partnership is a business organization owned by two or more persons. The partners must agree on how profits and responsibilities are divided. The most common type of partnership is a general partnership. Partners in a general partnership share equally in both responsibility and liability. Doctors, lawyers, accountants and other professionals often form general partnerships. In a limited partnership only one partner is required to be a general partner. That partner has control over the business, but unlimited personal liability for the firm’s actions. Other partners contribute only money. A newer type of partnership is the limited liability partnership (LLP). In this type of partnership all partners are limited partners and are shielded from personal liability in certain situations.

     One important advantage of a partnership is that the responsibility for the business may be shared. In a successful partnership, each partner brings different strengths and skills to the business. Each partner’s assets, or money and other valuables, improve the firm’s ability to borrow funds for operations or expansion. Another advantage of partnerships is that like sole proprietorships, they are easy to start.

     Partnerships also have disadvantages. Each general partner is responsible for the acts of the other partners. Unless the partnership is an LLP, at least one partner has unlimited liability. Like a sole proprietor, partners can lose their own personal property in paying the firm’s debts. Another potential problem is conflict among the partners. They need to come to agreement about business goals and philosophies.