Partnership Requirements
A partnership requires two or more partners to form. If only one partner remains, it legally dissolves. A new partnership must then form to continue business.
Ownership and Responsibilities
- A sole proprietorship has one owner.
- Partners share ownership, responsibility, profits, and losses.
- When a partnership dissolves, partners must settle accounts under law.
Types of Partnerships
- A limited partnership has at least one general partner and limited partners.
- The general partner runs the business while limited partners invest without decision-making.
- Limited partners not personally liable for debts if maintain status.
- A limited liability partnership (LLP) combines a limited partnership and limited liability.
Profit and Loss Sharing
Partners share profits equally unless agreed otherwise. They also share losses equally unless arranged otherwise. Buyout provisions may not apply when the second to last partner leaves a two-person partnership. Courts see this as ending that partnership, requiring a new one to continue business.