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Establish a Partnership

The advantages of partnerships are that they are flexible and simple. Unlike a sole proprietorship, however, a partnership is a separate entity. The main disadvantages of partnerships ate the unlimited
liability and lack go continuity existence.

Under the law of most states, partnerships are separate legal entities that can hold title and conduct transaction in the name of the partnership. From a taxation standpoint, partnerships do not pay federal income taxes. Rather, the income and losses of the partnerships flow through to the individual partners’ federal income tax returns.

The partners have a right to participate in management, share in profits, collect compensation, and be indemnified. After termination of a partnership, the partners are entitled to have their contributed capital returned to them. The partners also have the right to information and the right to accounting.

In addition to partnerships, there are also limited partnerships. A limited partnership is a special form of partnership that has both limited and general partners. General partners invest capital but also manage the business and are personally liable for partnership debts.

Limited partners invest capital but don’t participate in management and are not personally liable for partnership debts beyond their capital contribution.