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Partnership types include limited, general and joint venture

| Jul 28, 2020 | Business Law And Litigation |

Residents and businesses in California might be interested in knowing more about the different types of partnerships that are available when forming a business. These include limited, general and joint partnerships. A business contract between two or more people is a partnership, and it can come in many different forms.

Partnerships must file an IRS Form 1065 as well as a Schedule K-1. This form details the taxable income for each partner for when he or she files his or her taxes.

A limited partnership (LP) means the partners have limited liability, and it is for only their investment. It is different from the general partnership, in which the partners have unlimited liability. The limited partners might have some involvement in the company’s management. Usually, these partners have the goal of getting a return on their investment.

A general partnership (GP), on the other hand, has unlimited liability but also shares the profits of the company. It might entail a formal contract or just an agreement as people sit down to talk. They may decide how the business is run as there are no specific requirements except to file Form 1065 and issue Schedule K-1s among the partners. Personal assets of the partners may be included under unlimited liability.

A joint venture (JV) partnership can exist for many reasons and does not need to be a partnership. This will depend on the collaborating members. Contractual agreements, rather than partnership names, define a JV.

Business law and litigation can involve a variety of forms that go beyond a handshake and an informal talk at a coffee shop. The right written business contract offers protection and can guard the interests of the people and the business. An attorney versed in business law might be of value in navigating the legal aspects of a business.