Business Law 101 (Part III) -- Everything You Want to Know about the Business Entity "Partnerships"

Today we will tell you everything you want to know about the business entity -- "Partnerships".
Partnerships
A Partnership is a type of business entity in which partners share with each other the profits or losses of the business. Partnerships are often favored over corporations for taxation purposes, as the partnership structure does not generally incur a tax on profits before it is distributed to the partners. However, the owners are fully responsible for the company and there is no form of limited liability. Owners of a partnership are personally and fully liable for their actions as well as actions of their partners, regardless of who is at fault.
Owners of a partnership can limit the liabilities of individual partners by forming a limited liability partnership, by designating limited liability partners and general partners, and by providing some sort of limited liability for limited liability partners. The full particulars are very technical. Please contact us for a free business lawyer consultation for further information.
A general partnership is the default business organization for two or more people. If two or more people start a business together and do not specifically set it up as formal partners with a written partnership agreement, a partnership relationship in which both partners have equal shares in the business will be automatically assumed. Thus, to fully protect the rights and obligations of the partners in a partnership relationship, a partnership agreement that details the rights and obligations of the partners, and the division of properties and assets in case the company is liquidated and dissolved, is highly recommended, although not mandatory.
The full particulars of a partnership arrangement are very technical and there are many steps and details you need to pay attention to when drafting a partnership arrangement.
ABOUT THE AUTHOR: Tony Wong
Toronto Family Law is one of Toronto's professional family law firms in handling family law matters and divorce applications.