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Partnerships: Collaboration and Shared Responsibility

by | Jun 30, 2023

A partnership is a business structure where two or more individuals agree to carry on a business together, with the goal of making a profit.

 

Here are key aspects of partnerships:
1. General Partnership (GP): In a general partnership, all partners share equal responsibility for managing the business and have unlimited personal liability for the partnership’s debts and obligations. Decisions are typically made jointly, and each partner’s actions bind the partnership.
2. Limited Partnership (LP): A limited partnership consists of one or more general partners who assume full liability and manage the business, and one or more limited partners who contribute capital but have limited liability and no involvement in day-to-day operations.
3. Shared Profits and Losses: Partnerships distribute profits and losses among the partners based on the agreed-upon partnership agreement. Typically, this is based on the partners’ capital contributions or as specified in the partnership agreement.
4. Pass-Through Taxation: Partnerships are pass-through entities for tax purposes. This means that profits and losses flow through to the partners’ individual tax returns, and the partnership itself does not pay income tax.
For more information or to speak with a legal professional at Pitcoff Law Group in regard to your legal matter, call: (646) 386-0990 or email: info@pitcofflawgroup.com today.
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