To run a business, two or more people join together and share the costs, profits and also losses between them. This is called as partnership. Partnership is a common type of ownership in small businesses along with sole proprietorship. Partnership offers some tax benefits, but is not preferred as corporation due to liability factor.
Now let’s go into the types of partnerships-
General Partnership:
General Partnership is the most simple and basic form of partnership. All the general partners are responsible for any of the business dealings done by any of the partners. For instance- if A and B are two partners, and A deals the process and at one time defaults by a third party, then A is not only responsible for the repairing, B is also equally liable to the third party. Due to the clause, the agreement is risky undertaking.
Limited Partnership:
All the partners will not have the same capacity in the partnership agreement. These are the inactive partners, who don’t take up the decision making and management part. Mostly these put in some capital and take profits home. In case of any default, limited partners will not have any stake in personal asset.
Limited Liability Company (LLC):In the case of general partnership, not all members can join as limited partners. However, in a limited liability company; many partners can enter as limited liability partners. Limited Liability Company is similar to a corporation. In Limited Liability Company, one partner is not responsible for other partner’s actions. Normally businesses start in the form of general partnership and slowly move into LLC and then to corporations.
Anyone wishes to form a partnership firm in India then consult us
Now let’s go into the types of partnerships-
General Partnership:
General Partnership is the most simple and basic form of partnership. All the general partners are responsible for any of the business dealings done by any of the partners. For instance- if A and B are two partners, and A deals the process and at one time defaults by a third party, then A is not only responsible for the repairing, B is also equally liable to the third party. Due to the clause, the agreement is risky undertaking.
Limited Partnership:
All the partners will not have the same capacity in the partnership agreement. These are the inactive partners, who don’t take up the decision making and management part. Mostly these put in some capital and take profits home. In case of any default, limited partners will not have any stake in personal asset.
Limited Liability Company (LLC):In the case of general partnership, not all members can join as limited partners. However, in a limited liability company; many partners can enter as limited liability partners. Limited Liability Company is similar to a corporation. In Limited Liability Company, one partner is not responsible for other partner’s actions. Normally businesses start in the form of general partnership and slowly move into LLC and then to corporations.
Anyone wishes to form a partnership firm in India then consult us
