A general partnership is not a legal entity separate from its owners.
The difference between a sole proprietorship and partnership is that a sole proprietorship has only one owner and a partnership has two or more owners.
Owners can take withdrawals and, if specified in the partnership, guaranteed payments.
Owners pay taxes quarterly.
Can be started through an oral agreement, though a written agreement is advisable (and required in some states).
Many states have legal provisions for limited liability partnerships (LLPs) that provide for some limitations on the liability of the owners and on points such as profit/loss percentages; business decisions; addition and withdrawal of a partner and terms of operation.
Some partnership allocation structures may subject you and your business to heightened Internal Revenue Service (IRS) scrutiny.
To form a partnership, you must register your business with your state, a process generally done through your Secretary of State’s office.
Paul Mocker, CPA
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