What is a Partnership?
What it is?
- A partnership is created between various people who want to co-own a business
- While the partnership must report to state taxing authorities and the IRS, the partnership itself is not a taxable entity. However, the partners will be taxed for the profits and losses of the partnership
- The partners are, jointly and severally, personally liable for the debts and taxes and any liability as to errors and omissions of the partnership for an unlimited amount
- The partnership normally dies when a partner dies
Formalities to Set-Up
- A partnership should be documented by a partnership agreement, outlining the agreement between the partners relating to the terms of the amount of the investment, form of payout of proceeds, addition of partners, termination of partners or partnership and other expectations of the partners