Business Partnership Articles: Everything You Need to Know

Business partnership articles, or articles of partnership, form a legal document that creates a binding agreement amongst business partners to combine their capital and labor while sharing their collective profits, losses, and liabilities. 3 min read updated on February 01, 2023

Business Partnership Articles Overview

Business partnership articles, or articles of partnership, form a legal document that creates a binding agreement amongst business partners to combine their capital and labor while sharing their collective profits, losses, and liabilities. Business partnership articles are not required legally by any regulatory agency or government body and entering into them is entirely voluntary, but it is considered a best practice to use them. Business partnership articles are often useful in resolving or preventing disagreements with partners since they clarify the relationship terms and outline how a partnership’s assets may be shared.

Components of Business Partnership Articles

Business partnership articles will typically cover a number of details related to the formation of a partnership . These include:

  • The name of the partnership. For your name, you can use the last names of the partners involved or you can make up a name that is in some way reflective of your business. If you choose the latter, you must use your state’s business name search engine ( example ) to make sure the name is free to be used.
  • Partnership contributions. Which partners will contribute property, services, or cash and in what amounts, as well as what ownership percentages they will subsequently have, should be recorded in the articles.
  • Profit and loss allocation. Whether these will be divided amongst the partners proportionally or by some other system should be stated. Some partners may have different financial needs than others, so proportional distribution may not always be the best option.
  • Authority of the partners. Unless stated otherwise, any partner will have the power to bind the partnership without the other partners’ consent. If a majority or unanimous consent is desired for partnership decision-making , this should be stated outright.
  • Management duty. Although it may not be necessary to create strict divisions regarding who has the authority to act in what capacity, it may be useful to detail to some degree who will be responsible for certain aspects of the business. Such aspects may include bookkeeping, customer relations, personnel supervision, and business negotiations.
  • New partner admittance. If you think that at some point you will want to expand the business, you should detail how new partners may be brought on. Agreeing on this beforehand will make the issue a lot easier to deal with should it arise later.
  • Partner withdrawal. Similarly, how the withdrawal of a partner will be handled, including withdrawal by death, should be specified. In the case of voluntary partnership withdrawal, a buyout scheme should be created.
  • Dispute resolution. If the partners become deadlocked over an issue, how the deadlock will be broken should be stated. Mediation, arbitration, and court-ordered resolution are the three most common options.

Additionally, the following basic information should also be included in the business partnership articles:

  • The names of the partners.
  • The partnership’s address (for its main place of business).
  • The partnership’s business purpose.
  • The partnership’s terms.
  • The partnership’s beginning and end date, if it is not meant to be perpetual.
  • How salary distribution (if there is any) will work in the partnership.
  • Under what conditions and by what means partnership rights can be sold or transferred.

Qualities of a Strong Business Partnership

In addition to having well-written business partnership articles, the following qualities will signal the likelihood of a successful partnership for the parties involved:

  • Trust. If business partners cannot trust one another, it is unlikely that any partnership can work for an extended period of time. Partners do not have to act or think alike, but they should be able to feel that they are being dealt with fairly by the other partners.
  • Mutual respect. Just as being of similar personality is not necessary to trust one another, so too is it unnecessary for respect to be felt. In fact, to some extent differences in ability may heighten respect for one another insofar as these other abilities can shore up one’s own shortcomings, which will thereby strengthen the business as well.
  • Shared values and vision. That said, it is important that business partners have a similar general outlook for their business, otherwise the conflicting goals will most likely either cripple the partnership or tear it apart.

If you need help understanding issues relating to business partnership articles, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Articles Of Partnership Definition And Format

Articles Of Partnership Definition And Format

Published: October 8, 2023

Learn about the definition and format of articles of partnership in finance. Gain insight into this crucial aspect of business collaboration.

  • Definition starting with A

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Understanding Articles of Partnership: Definition, Format, and Importance

Are you considering starting a business venture with one or more partners? If so, it is crucial to establish a solid foundation for your partnership, and one way to do that is by creating and implementing a detailed Articles of Partnership. In this blog post, we will explore what Articles of Partnership are, their format, and why they are essential for successful business partnerships.

Key Takeaways:

  • Articles of Partnership are legal documents that outline the rights, responsibilities, and obligations of each partner within a business partnership.
  • These documents serve as a blueprint for the partnership, clarifying vital aspects such as profit sharing, decision-making, and dispute resolution.

What are Articles of Partnership?

The Articles of Partnership are legal documents that define the terms and conditions under which a business partnership operates. They serve as a contractual agreement between partners, outlining their respective roles, responsibilities, and expectations within the partnership.

Typically, the Articles of Partnership include crucial information such as:

  • The name and purpose of the partnership
  • The duration of the partnership
  • The capital contributions of each partner
  • The allocation of profits and losses among partners
  • The decision-making process within the partnership
  • The procedures for admitting new partners or terminating existing ones
  • The dispute resolution mechanism

By clearly defining these aspects, the Articles of Partnership help establish a fair and harmonious working relationship between partners, minimizing misunderstandings and conflicts down the road.

The Format of Articles of Partnership

While the exact format may vary depending on the jurisdiction and nature of the business, an effective Articles of Partnership document often includes the following sections:

1. Introduction

This section provides a brief overview of the purpose and goals of the partnership. It may also include information about the partners involved and their respective roles.

2. Definition of Terms

To ensure clarity and avoid confusion, the document should define key terms used throughout the Articles of Partnership. For example, terms such as “capital contribution,” “voting rights,” or “profit sharing” should be explained in this section.

3. Partnership Structure

This section outlines the organizational structure of the partnership. It defines the roles and responsibilities of each partner, as well as any specific management or operational arrangements.

4. Capital Contributions

Partnerships involve the pooling of resources, and this section specifies each partner’s initial capital contribution and any future financial obligations.

5. Allocation of Profits and Losses

Profit sharing is a critical aspect of any partnership, and this section details how profits and losses will be allocated among partners. It may include provisions for drawing regular salaries, sharing in business growth, or dealing with losses.

6. Decision-making and Governance

Partnerships require collective decision-making, and this section sets out the process for making decisions within the partnership. It may outline voting rights, the role of managing partners, and other decision-making mechanisms.

7. Admission and Withdrawal of Partners

In case new partners need to be admitted or existing partners wish to withdraw, this section provides guidelines and procedures for such scenarios. It ensures transparency and fairness in the partnership’s evolution.

8. Dispute Resolution

No partnership is immune to conflicts, and this section defines the mechanisms for resolving disputes. It may include provisions for mediation, arbitration, or other alternative dispute resolution methods.

9. Termination

This final section outlines the circumstances under which the partnership may be dissolved or terminated. It ensures a systematic approach to winding down the business and settling any outstanding obligations.

The Importance of Articles of Partnership

Now, you might be wondering: What makes Articles of Partnership so crucial for a successful business partnership? Well, here are some reasons why:

  • Clarity and Transparency: Creating a clear and comprehensive Articles of Partnership document eliminates ambiguity and promotes transparency. All partners are on the same page regarding their rights, duties, and expectations.
  • Dispute Prevention and Resolution: By clearly defining decision-making processes, profit sharing, and dispute resolution mechanisms, partners can prevent conflicts from escalating and find effective solutions when disagreements arise.
  • Legal Protection: Articles of Partnership provide legal protection to all partners involved. In case of any breach or violation of the partnership agreement, partners can refer to the document for resolution.
  • Smooth Operations: With defined roles and responsibilities, partners can focus on their specific areas of expertise, leading to more efficient and productive operations.
  • Flexibility: Articles of Partnership can be customized to suit the unique needs and goals of the partnership, allowing partners to tailor the document according to their specific requirements.

Overall, creating and implementing a well-drafted Articles of Partnership is crucial for establishing a strong foundation, promoting harmony, and ensuring the long-term success of your business partnership.

By investing time and effort into creating a comprehensive document, partners can navigate potential pitfalls and build a thriving partnership that stands the test of time.

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Partnership Agreement

Jump to Section

What is a partnership agreement.

A partnership agreement is an internal business contract that outlines specific business practices for the partners of a company. This document helps establish rules for how the partners will manage business responsibilities, ownership and investments, profits and losses, and company management. While the word partners often refer to two people, in this context there's no limit to how many partners can form a business partnership .

Partnership agreements go by different names depending on the state and industry in which they're formed. You might know partnership agreements as:

  • Articles of Partnership
  • Business Partnership Agreement
  • Creation of Partnership Agreement
  • Formation of Partnership Agreement
  • General Partnership Agreement
  • Partnership Contract

Partnership agreements help answer, "What happens if..." questions before they come up in practice to ensure the company runs smoothly. The three main types of partnership agreements are:

  • General: In a general partnership , all partners equally share liabilities, profits, and assets.
  • Limited: Limited partnerships protect partners who do not contribute capital equally. This way, the partner or partners who contribute the most money or assets earn the most profit and take on the most liability, while partners who contribute less in capital or assets earn less in profits and carry less liability.
  • Limited liability : Limited liability partnerships function much the same as general partnerships, but give the partners protection from the malpractice or negligence claims that may arise from their other partners. The distribution of shares in an LLP will depend on the partnership agreement.

Partnership agreements help establish clear boundaries and expectations regardless of whether your partnership is general, limited, or limited liability.

See Partnership Agreement Pricing by State

  • Connecticut
  • District of Columbia
  • Massachusetts
  • Mississippi
  • New Hampshire
  • North Carolina
  • North Dakota
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • West Virginia

Benefits of a Partnership Agreement

Partnership agreements offer a host of benefits to those business owners who create one. A few of the most substantial benefits include:

  • Business outline The agreement delineates all the elements of the business and how the partners are to manage each, which helps reduce confusion once the business is running.
  • Clear responsibilities The partnership agreement clearly establishes personal responsibilities for each partner in terms of capital, profits, losses, and liabilities in addition to business management and oversight.
  • Form of mediation The primary benefit of a partnership agreement is in its ability to forestall future arguments. Since all expectations and responsibilities are outlined, all partners should know what they need to do to fulfill their duties.

Potential Consequences

When you start your business, the division of labor and resources between partners might seem obvious, so you might not think it's worthwhile to create a partnership agreement. Unfortunately, your business might suffer negative consequences in the future without one.

  • State law Every state has different laws governing partnerships. If you don't create an agreement, state law will automatically govern the future of your company in the case of a partner's death or another change to the partnership, regardless of your wishes or intent. The default provisions under state law may not always align with the wishes of the partners when it comes to business operations.
  • Disputes Disputes regarding the operation of the company could arise in the future. With no documentation outlining the goals, responsibilities, and expectations of the partners, the company could suffer.
  • Tax implications For those limited or limited liability partnerships, without a clear description of each partner's contributions, the state could assume each partner owns the same share of the company and tax them accordingly. It is worth noting that partnerships are pass-through entities, meaning the business itself is not subject to taxation. The profits and losses pass through to the individual partners who then report them on their personal tax return.

Elements of a Partnership Agreement

Most partnership agreements share some common elements . When you're drafting yours, ensure you include the following categories:

  • Name Include the name of your business.
  • Purpose Explain what your business does.
  • Partners' information Provide all partner's names and contact information.
  • Capital contributions Describe the capital (money, assets, tangible items, property, etc.) that each partner provided.
  • Ownership interest Offer the specific percentage of the company that each partner owns.
  • Profit and loss distribution Explain the percentage of profit and loss assigned to each partner and how the company will distribute revenue.
  • Management and voting Outline how the partners will manage the company by delineating individual responsibilities in addition to explaining decision-making and voting between partners.
  • Adding or removing partners Create specific guidelines for adding new partners, removing partners who want to leave, and removing partners who don't want to leave.
  • Dissolution Describe how you'll liquidate the business and share out any profits should the company dissolve.
  • Partnership tax elections Assign a partnership representative to manage all tax communications.
  • Death or disability Provide clear instructions for how each partner's ownership in the company should be liquidated or redistributed in the unlikely event of their death or disability.

When to Use a Partnership Agreement

Partnership agreements are for two or more people entering into a for-profit business relationship to use. Almost always, the partners establish a partnership agreement before going into business or just after establishing their company. In some cases, partners create partnership agreements after the fact to ensure everyone has a clear understanding of how the company operates, but it's best to have the agreement established and signed before opening your business's doors.

How to Write a Partnership Agreement

You have several options when establishing a partnership agreement. Since every state has its own laws governing formal business partnerships, you could start by reviewing the state's rules through your Department of State. Another option is to look for templates you can use to simply fill in or guide you as you structure your own partnership agreement. Finally, you can consult an attorney who specializes in contract law. Contract lawyers can help you create a custom partnership agreement.

Here is an article on how to write a partnership agreement.

Using an Attorney

Contract lawyers are your best course of action for establishing an effective partnership agreement. They'll know what's necessary to include for your state and industry and can help ensure that you've thought of and described every possible scenario and element for your business for the smoothest management experience.

Additionally, the use of an attorney ensures a mediating third party who can help ease any initial disagreements and maintain fairness within the contract. Contract attorneys are well-versed in writing legal documents , so they'll use specific language that will offer clear guidance later if needed rather than vague statements that might have seemed sufficient when originally written but are unclear years later.

Related Documents

Besides your partnership agreement, you might benefit from producing several other contractual business documents to ensure the smooth management of your company.

  • Business Sale Agreement If you're purchasing your business from someone else, this document outlines all the specifics of the sale.
  • Notice of Withdrawal from Partnership While this document might not get used or won't be used for some time, drafting a notice of withdrawal from partnership at the start of the business ensures all partners know what they'll need to do should they decide to exit the partnership.
  • Assignment of Partnership Interest This document outlines how to transfer partnership interest between business partners.
  • Partnership Amending Agreement Use this document to make any changes to the original partnership agreement.
  • Joint Venture Agreement This document outlines the specifics of how two or more people combined their assets or capital for a joint business venture.
  • Business Plan Use this internal document as a comprehensive guide on how the business will run, the specific departments, mission, goals, and more.

Partnership agreements are a necessary contract for any professional partnership. They help protect all partners financially and can ease any potential tensions throughout the life of the business. Consult with a lawyer to ensure your partnership agreement fully covers the elements of a partnership.

The Importance of Having a Partnership Agreement

Partnership agreements can resolve potential conflicts between partners. Disagreements may arise around issues, such as ownership division, roles and responsibilities, and asset division, without clearly defined terms and conditions .

Partners should enter into a formal agreement to ensure that both parties form and manage it correctly while avoiding partner conflicts. Disputes can result in expensive legal proceedings and unnecessary financial losses for all parties when contracts don’t address issues adequately.

Types of Partnerships

Partnerships are businesses with two or more business owners. Each partner contributes to the businesses’ financial or operational aspects in exchange for profit & loss (P&L). There are different types of partnerships to address the unique needs of your specific business situation.

There are four partnership types to consider:

  • General partnerships (GPs)
  • Limited liability partnerships (LLPs)
  • Limited partnerships (LPs)
  • Limited liability limited partnership (LLLPs)

Various provisions surround the partnership types. A contract lawyer will ensure that you walk away with an amicable agreement for your relationship, industry, company size, and business needs.

Need help with a Partnership Agreement?

Meet some of our partnership agreement lawyers.

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I have over 25 years' experience representing individual and company clients, large and small, in transactions such as mergers and acquisitions, private offerings of securities, commercial loans and commercial endeavors (supply contracts, manufacturing agreements, joint ventures, intellectual property licenses, etc.). My particular specialty is in complex and novel drafting.

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Attorney Skelly is a midwestern transplant from Iowa. She has been in Florida for the past 11 years. She went to undergrad at Buena Vista University, which is a small liberal arts college in Storm Lake, Iowa. After graduating with her Bachelor's degree in criminal justice, she went on to obtain her Master's degree in criminal justice from Kaplan university, which is now Purdue Global. While attending school full time for her Master’s degree, Attorney Skelly worked full time in social services helping children and their families who were involved in the dependency system. Attorney Skelly has a professional background in child welfare and social services having worked for 18 years in the field. Attorney Skelly always had a lifelong dream of becoming a lawyer and decided to fulfill her goal in May of 2019 by starting law school at Western Michigan University Thomas M. Cooley Law School at their Riverview campus. She did their accelerated program and completed law school in just over two years and graduated magna cum laude with honors. Attorney Skelly also received certificate of merit awards, which means attaining the highest grade in the class in secured transactions, research and writing, and family violence practice. While in law school Attorney Skelly was a teaching assistant to two tenured professors as well as a note taker for those students who had accommodations. She was also awarded the Alumni Association’s Distinguished Student Award. In her legal career, Attorney Skelly started out at the State Attorney’s Office in Fort Myers, FL. She helped prosecute several cases and personally worked as second chair on 9 jury trials and one bench trial. Once Attorney Skelly passed the bar, she worked for a family law firm under a board certified marital and family law practitioner where she gained tremendous knowledge in the area of family law which includes divorce, paternity, child custody/parenting plans, alimony and child support as well as domestic relations issues such as domestic violence injunctions. Attorney Skelly is also certified as a Guardian ad Litem and can serve as a Guardian ad Litem in family court cases. Attorney Skelly is a proud member of the Florida Bar, the Lee County Bar Association, and the American Bar Association.

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Find the best lawyer for your project

How to ensure clarity in a partnership agreement.

I am looking to form a partnership with another individual. We are both going to be investing in the same business and want to ensure that our interests are well protected. We have drafted a partnership agreement but are not sure if it is clear enough. We want to make sure that there are no misunderstandings between us and that our interests are clearly defined. We need help to make sure that the partnership agreement is clear and unambiguous.

meaning articles of partnership

Having an attorney review the current draft will provide an objective perspective on any gaps or areas lacking clarity in your agreement. Investing a little more upfront will prevent issues later should disputes arise. Please let me know if you need any other specific suggestions on strengthening your partnership agreement.

How can I make a legal contract signature with no experience?

I'm currently making a new crypto coin with my friend. I want to make an official personal contract signature so that my friend doesn't resign or remove me from his team even though I am the founder. So, the point is that if my friend wanted to do the same, he couldn't because he already had a contract signed.

meaning articles of partnership

There are clauses that you can put in contracts to incentivize key people to stay in the company.

How do I get out of a partnership agreement?

I am looking at options on how to get out of a business partnership I entered into last year.

meaning articles of partnership

It will depend on what your partnership agreement says. You would have to look to the language of the agreement you signed to determine that. DISCLAIMER The answers to these questions do not constitute legal advice and does not create an attorney-client relationship with the attorney and anyone who reviews these responses.

How to exit a general partnership?

I am currently a partner in a general partnership with another individual, but I have decided to leave the partnership for personal reasons. However, I am unsure of the legal steps required to properly exit the partnership, including the distribution of assets and liabilities. Therefore, I would like to seek the guidance of a lawyer to ensure that my exit from the partnership is handled properly and fairly.

You need to review the partnership agreement to see the procedure for exiting the partnership. The partnership agreement will also address distributions.

What is a limited partnership agreement?

Being asked to sign one and not sure what it is. I'm trying to create a partnership with a few of my colleagues and I'm concerned about the word 'limited'.

meaning articles of partnership

We really need to know more about the business and how everyone envisions ownership in order to answer the question. In general (and this is very general - I am a PA lawyer, not Tennessee), a limited partnership is an entity through which a business or property is owned. In a limited partnership, you need to have a general partner (either one more individuals or entities) who essentially manage the entity, and also have liability for all liabilities of the general partnership. The limited partners invest in the entity, but have no liability for the entity's obligations.

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Partnership.

According to New York Partnership Law , a partnership is a voluntary, contractual association between two or more parties to carry out business for-profit as co-owners. Partnerships are composed of partners , who are agents of the partnership and may enter into contracts on behalf of the partnership.

An express agreement is not needed to form a partnership; partnerships are formed simply by persons associating themselves as co-owners to carry out business for profit. In other words, it does not matter if the parties never intended to become partners – courts will evaluate the formation of partnerships without considering the parties’ subjective intent.

Partnerships are often governed by the law of the state in which the partnership has its principal place of business .

Although the two are similar, a partnership is distinct from a joint venture . Generally, courts have differentiated partnerships as being formed for ongoing general business purposes, while joint ventures usually only relate to a single transaction (See Zacher v. Harrah's New Orleans Mgmt. Co. ).

See also: 26 U.S. Code § 707 - Transactions Between Partner and Partnership ,  26 CFR § 1.47-6 - Partnerships , and state corporation laws .

[Last updated in November of 2023 by the Wex Definitions Team ]

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articles of partnership

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A quick definition of articles of partnership:

Articles of Partnership : A document that outlines the rights and responsibilities of partners in a business. It is like a contract between the partners and does not involve any third parties. It is also known as a partnership agreement .

A more thorough explanation:

Definition: Articles of partnership refer to a contract that outlines the rights and responsibilities of partners towards each other in a partnership. It does not cover the relationship between the partners and third parties. It is also known as a partnership agreement .

Example: If two friends decide to start a business together, they may create articles of partnership to define their roles and responsibilities. The agreement may include details such as the amount of capital each partner will contribute, how profits and losses will be shared, and how decisions will be made.

Explanation: The example illustrates how articles of partnership can be used to establish a clear understanding between partners in a business. By defining their roles and responsibilities, partners can avoid misunderstandings and conflicts that may arise in the future.

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What is the Article of Partnership?

Partnership Deed

Articles of Partnership are voluntary agreements between the parties involved in a particular business activity. Although not legally required by any regulatory authority, an article of the partnership agreement is currently considered a best business practice involving partnership.

An article of partnership is an agreement between company partners to pool labour and capital, and a share in profit, loss, and liability is formed. Such a document outlines all the terms involved parties enter into a partnership and serves as the partnership guidebook.

Partnership

A partnership is a legal agreement between two or more parties to run a business and split the profits. Partnership agreements come in various types. In particular, all partners in a partnership business share earnings and liabilities equally, although partners may have restricted liability in other cases. There is also the so-called “silent partner,” where one party does not participate in the company’s daily operations.

A partnership, broadly speaking, can be any project that several people undertake together. Governments, non-profit organisations, for-profit companies, and private individuals could be the parties. A partnership’s objectives may also differ in various aspects. The three primary types of partnerships are general partnerships, limited partnerships, and limited liability partnerships when referring to a for-profit endeavour carried out by two or more people. All partners in a general partnership are equally liable financially and legally. The debts that the partnership incurs are personally liable to the individuals. Equal shares are also given to profits. In a partnership agreement, the mechanics of profit sharing will almost definitely be spelt out in writing.

All about Articles of Partnerships

Articles of Partnership are voluntary agreements between the parties involved in particular business activity. Although not legally required by any regulatory authority, an article of the partnership agreement is currently considered a best business practice involving partnership. Since they define the conditions of the partnership and specify how its assets are divided, partnership articles play a great role in preventing and resolving disputes between partners.

The articles of firm registration online should specify the individual task and also related responsibility. It designates who is in charge of specific important tasks, such as managing inventories and keeping track of revenue and expenditures. It should outline who has the authority to make particular choices. Partners should also consider adding provisions addressing issues such as whether partners are permitted to work for organisations other than the partnership or whether a non-compete agreement is necessary when one partner quits the company.

What Is a Partnership Deed?

When two or more parties collaborate to run a business, a partnership deed is an important formal legal arrangement. This agreement outlines all key terms and circumstances, including profit-and-loss allocation, liabilities, admission of new partners, established regulations, compensation, and exit procedures.

A partnership deed is crucial, and if the business finds itself in court: https://districts.ecourts.gov.in/ for various reasons, it can be considered valid evidence. There is no chance of the Partnership Deed, also known as the Partnership Agreement, being lost while in the partners’ custody because it is registered under the Indian Registration Act of 1908.

Partnership Deed Contents

Although there isn’t a set format for writing a partnership deed, most deeds contain the sections listed below:

  • The company’s name
  • Information about each partner’s name
  • Beginning date of the company’s operations Duration of the company’s existence
  • Each partner provided money
  • The ratio of sharing profits/losses
  • interest due to partners on capital
  • The maximum amount of loans each partner may take out
  • Payouts to partners’ salaries, if any
  • The steps involved in a partner’s admittance or retirement
  • The technique used to determine goodwill
  • preparing the company’s accounts
  • Method of paying debts owed to the executors of a deceased partner
  • The steps are taken if partners disagree.

What Is the Main Difference Between Articles of Partnership and Partnership Deed?

As clearly stated above, both Articles of Partnership and Partnership Deed are identical and important aspects in carrying out a smooth and successful business partnership. Partnership Deed is registered under the court of law, whereas Articles of Partnership are not.

What Do Articles of Partnership Cover?

In typical articles on the partnership , several topics about the creation of a partnership are discussed; they consist of:

  • The names of the partnership’s participants involved in the company.
  • The principal office of the partnership
  • The prime goal of the partnership’s operations
  • The various partnership’s terms
  • When and how the partnership will begin, if at all, and when and how it will dissolve
  • Capital investment made by each partner involved in the partnership
  • The proportion of each partner’s ownership in the partnership
  • Distribution of the partnership’s profits (equally is the default, but there may be special conditions)
  • Ways by which the cooperation will be run
  • Salaries, if any, and ways to be paid
  • How and under what circumstances partnership rights may be sold or transferred?

Example of How Articles of Partnership Work

Will each partner be treated equally regardless of cash contribution, for instance, if one person came up with the initial idea for the partnership but didn’t give any money and the other partners each made an equal amount? Similar to this, a partnership agreement’s articles of partnership can prevent disagreements about roles and responsibilities and who has unique rights. It can also specify how to handle partners who choose to work on their outside of the partnership or quit outright, as well as grant one partner the power to make decisions without the input of the other partners. By establishing clear guidelines in advance, such an agreement will also assist and guide a partnership in avoiding potential disagreements around profit or loss distributions. For instance, a partner would anticipate receiving a higher portion of the earnings if they invested more time or money than the other partners. Writing articles of partnership is important to prevent disputes between the partners over issues like how partners will be paid and what they will receive if they decide to leave the partnership. To know more about company-related legal aspects and their application, visit Vakilsearch . We provide clear and authentic  information about legal aspects of the company and other related issues, making your business experience smooth and safe lessening the risk factors.

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  • Advantages and Disadvantages of Partnership Firm
  • Complete details about Merits of Partnership

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  • What Is Partnership

Partnership: Characteristics, Partnership at will

What is partnership.

A partnership is a kind of business where a formal agreement between two or more people is made who agree to be the co-owners, distribute responsibilities for running an organization and share the income or losses that the business generates.

In India, all the aspects and functions of the partnership are administered under ‘The Indian Partnership Act 1932’. This specific law explains that partnership is an association between two or more individuals or parties who have accepted to share the profits generated from the business under the supervision of all the members or behalf of other members.

What is Partnership?

Also read: Importance of Partnership Agreement

Features of Partnership:

Following are the few features of a partnership:

  • Agreement between Partners : It is an association of two or more individuals, and a partnership arises from an agreement or a contract. The agreement (accord) becomes the basis of the association between the partners. Such an agreement is in the written form. An oral agreement is evenhandedly legitimate. In order to avoid controversies, it is always good, if the partners have a copy of the written agreement. 2. Two or More Persons:  In order to manifest a partnership, there should be at least two (2) persons possessing a common goal. To put it in other words, the minimal number of partners in an enterprise can be two (2). However, there is a constraint on their maximum number of people. 3. Sharing of Profit:  Another significant component of the partnership is, the accord between partners has to share gains and losses of a trading concern. However, the definition held in the Partnership Act elucidates – partnership as an association between people who have consented to share the gains of a business, the sharing of loss is implicit. Hence, sharing of gains and losses is vital. 4.Business Motive:  It is important for a firm to carry some kind of business and should have a profit gaining motive. 5. Mutual Business:  The partners are the owners as well as the agent of their firm.  Any act performed by one partner can affect other partners and the firm. It can be concluded that this point acts as a test of partnership for all the partners.
  • 6.  Unlimited Liability:   Every partner in a partnership has unlimited liability.

Types of Partnerships

A partnership is divided into different types depending on the state and where the business operates. Here are some general aspects of the three most common types of partnerships.

  • General Partnership

A general partnership comprises two or more owners to run a business. In this partnership, each partner represents the firm with equal right. All partners can participate in management activities, decision making, and have the right to control the business. Similarly, profits, debts, and liabilities are equally shared and divided equally. 

In other words, the general partnership definition can be stated as those partnerships where rights and responsibilities are shared equally in terms of management and decision making.  Each partner should take full responsibility for the debts and liability incurred by the other partner. If one partner is sued, all the other partners are considered accountable. The creditor or court will hold the partner’s personal assets. Therefore, most of the partners do not opt for this partnership.

  • Limited Partnership

In this partnership, includes both the general and limited partners. The general partner has unlimited liability, manages the business and the other limited partners. Limited partners have limited control over the business (limited to his investment). They are not associated with the everyday operations of the firm.

In most of the cases, the limited partners only invest and take a profit share. They do not have any interest in participating in management or decision making. This non-involvement means they do not have the right to compensate the partnership losses from their income tax return.

You might also want to know:  Different modes of reconstitution of Partnership Firm

  • Limited Liability Partnership

In Limited Liability Partnership (LLP), all the partners have limited liability. Each partner is guarded against other partners legal and financial mistakes. A limited liability partnership is almost similar to a Limited Liability Company (LLC) but different from a limited partnership or a general partnership. 

  • Partnership at Will

Partnership at Will can be defined as when there is no clause mentioned about the expiration of a partnership firm. Under section 7 of the Indian Partnership Act 1932, the two conditions that have to be fulfilled by a firm to become a Partnership at Will are:

  • The partnership agreement should have not any fixed expiration date.
  • No particular determination of the partnership should be mentioned.  

Therefore, if the duration and determination are mentioned in the agreement, then it is not a partnership at will. Also, initially, if the firm had a fixed expiration date, but the operation of the firm continues beyond the mentioned date that it will be considered as a partnership at will.

Quick link: Advantages of Partnership

Indian Partnership Act 1932

Most of the businesses in India adopt a partnership business, so to monitor and govern such partnership The Indian Partnership Act was established on the 1st October 1932.  Under this partnership act, an agreement is made between two or more persons who agrees to operate the business together and distribute the profits they gain from this business. 

Students can also refer to   Basic Concepts of Accounting for Partnership

Advantages of Partnership:

  • Easy Formation – An agreement can be made oral or printed as an agreement to enter as a partner and establish a firm.
  • Large Resources – Unlike sole proprietor where every contribution is made by one person, in partnership, partners of the firm can contribute more capital and other resources as required.
  • Flexibility – The partners can initiate any changes if they think it is required to meet the desired result or change circumstances.
  • Sharing Risk – All loss incurred by the firm is equally distributed amongst each partner.
  • Combination of different skills – The partnership firm has the advantage of knowledge, skill, experience and talents of different partners.

Partnership Examples:

Few co-branding partnership examples are listed below:

  • Red Bull and GoPro
  • Spotify and Uber
  • Levi’s & Pinterest
  • Maruti Suzuki
  • Hindustan Petroleum

Frequently Asked Questions on Partnership

What are the 3 types of partnership.

The three different types of partnership are:

  • General partnership
  • Limited partnership
  • Limited liability partnerships

What are 5 characteristics of a partnership?

The following are the five characteristics of a partnership:

  • Sharing of profits and losses
  • Mutual agency
  • Unlimited liability
  • Lawful business
  • Contractual relationship

What are 3 disadvantages of a partnership?

The following are the disadvantages of a partnership:

  • Risk of disagreement between partners
  • Instability of the partnership

What is the most important element of partnership?

The most important element in a partnership is the mutual agency, which states that every partner must be an agent and principal of himself and other partners. It says that business must be carried on by any or all of the partners.

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How Presidents Day went from George Washington’s modest birthday to big sales and 3-day weekends

Hundreds of revelers lined the streets of Alexandria’s Old Town on Monday to cheer on the annual parade to mark George Washington’s birthday. (Feb. 19)

Members of Alpha Company, 3d U.S. Infantry Regiment (The Old Guard), give a firing demonstration on the Bowling Green of George Washington's Mount Vernon on Monday, Feb. 19, 2024, in Mount Vernon, Va. The ceremonies at Mount Vernon were held to honor George Washington's birthday on Feb. 22, and President's Day. (AP Photo/Kevin Wolf)

Members of Alpha Company, 3d U.S. Infantry Regiment (The Old Guard), give a firing demonstration on the Bowling Green of George Washington’s Mount Vernon on Monday, Feb. 19, 2024, in Mount Vernon, Va. The ceremonies at Mount Vernon were held to honor George Washington’s birthday on Feb. 22, and President’s Day. (AP Photo/Kevin Wolf)

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Members of Alpha Company, 3d U.S. Infantry Regiment (The Old Guard), charge during a movement demonstration on the Bowling Green of George Washington’s Mount Vernon on Monday, Feb. 19, 2024, in Mount Vernon, Va. (AP Photo/Kevin Wolf)

FILE - John Lopes, playing the part of President George Washington, stands near the Washington Monument following a ribbon-cutting ceremony with first lady Melania Trump to re-open the monument, Thursday, Sept. 19, 2019, in Washington. Like the other Founding Fathers, George Washington was uneasy about the idea of publicly celebrating his life. He was the first leader of a new republic — not a tyrant. (AP Photo/Patrick Semansky, File)

FILE - The likeness of George Washington is seen on a U.S. $1 bill, March 13, 2023, in Marple Township, Pa. (AP Photo/Matt Slocum, File)

A statue of Abraham Lincoln towers over lifts overlooking Interstate 57 at the Anderson Equipment Rental Sales Service Company, Friday, Feb. 16, 2024, in Bourbonnais, Ill. (AP Photo/Charles Rex Arbogast)

NORFOLK, Va. (AP) — Like the other Founding Fathers, George Washington was uneasy about the idea of publicly celebrating his life. He was the first leader of a new republic — not a tyrant.

And yet the nation once again commemorated the first U.S. president on Monday, 292 years after he was born.

The meaning of Presidents Day has changed dramatically, from being mostly unremarkable and filled with work for Washington in the 1700s to the consumerism bonanza it has become today. For some historians the holiday has lost all discernible meaning.

Historian Alexis Coe, author of “You Never Forget Your First: A Biography of George of Washington,” said she thinks about Presidents Day in much the same way as the towering monument in D.C. that bears his name.

Palestinians wounded in the Israeli bombardment of the Gaza Strip are brought to Al Aqsa hospital in Deir al Balah, Gaza Strip, Thursday, Feb. 22, 2024. (AP Photo/Adel Hana)

“It’s supposed to be about Washington, but can you really point to anything that looks or sounds like him?” she said. “Jefferson and Lincoln are presented as people with limbs and noses and words associated with their memorials. And he’s just a giant, granite point. He has been sanded down to have absolutely no identifiable features.”

Here is a look at how things have evolved:

WASHINGTON’S BIRTHDAYS

Washington was born Feb. 22, 1732, on Popes Creek Plantation near the Potomac River in Virginia.

Technically, though, he was born Feb. 11 under the ancient Julian calendar , which was still in use for the first 20 years of his life. The Gregorian calendar , intended to more accurately mark the solar year, was adopted in 1752, adding 11 days.

Either way, Washington paid little attention to his birthday according to Mountvernon.org, the website of the organization that manages his estate. Surviving records make no mention of observances at Mount Vernon, while his diary shows he was often hard at work.

“If he had it his way, he would be at home with his family,” Coe said. “Maybe some beloved nieces and nephews (and friend) Marquis de Lafayette would be ideal. And Martha’s recipe for an indulgent cake. But that’s about it.”

Washington’s birthday was celebrated by his peers in government when he was president — mostly.

Congress voted during his first two terms to take a short commemorative break each year, with one exception, his last birthday in office, Coe said. By then Washington was less popular, partisanship was rampant and many members of his original Cabinet were gone, including Thomas Jefferson.

“One way to show their disdain for his Federalist policies was to keep working through his birthday,” Coe said.

The Library of Congress does note that a French military officer, the comte de Rochambeau, threw a ball celebrating Washington’s 50th birthday in 1782.

FILE - The likeness of George Washington is seen on a U.S. $1 bill, March 13, 2023, in Marple Township, Pa. (AP Photo/Matt Slocum, File)

The likeness of George Washington is seen on a U.S. $1 bill, March 13, 2023, in Marple Township, Pa. (AP Photo/Matt Slocum, File)

AFTER HIS DEATH

Washington was very aware of his inaugural role as president and its distinction from the British crown . He didn’t want to be honored like a king, said Seth Bruggeman, a history professor at Temple University in Philadelphia.

Still, he said, a market for Washington memorabilia sprang up almost immediately after his death in 1799 at age 67, with people snapping up pottery and reproductions of etchings portraying him as a divine figure going off into heaven.

“Even in that early moment, Americans kind of conflated consumerism with patriotic memory,” said Bruggeman, whose books include “Here, George Washington Was Born: Memory, Material Culture, and the Public History of a National Monument.”

MAKING IT OFFICIAL

It wasn’t until 1832, the centennial of his birth, that Congress established a committee to arrange national “parades, orations and festivals,” according to the Congressional Research Service.

And only in 1879 was his birthday formally made into a legal holiday for federal employees in the District of Columbia.

The official designation is as Washington’s Birthday, although it has come to be known informally as Presidents Day. Arguments have been made to honor President Lincoln as well because his birthdate falls nearby, on Feb. 12.

A small number of states, including Illinois, observe Lincoln’s birthday as a public holiday, according to the Library of Congress. And some commemorate both Lincoln and Washington on Presidents Day.

But on the federal level, the day is still officially Washington’s Birthday.

A statue of Abraham Lincoln towers over lifts overlooking Interstate 57 at the Anderson Equipment Rental Sales Service Company, Friday, Feb. 16, 2024, in Bourbonnais, Ill. (AP Photo/Charles Rex Arbogast)

SHIFT TO CONSUMERISM

By the late 1960s, Washington’s Birthday was one of nine federal holidays that fell on specific dates on different days of the week, according to a 2004 article in the National Archives’ Prologue magazine.

Congress voted to move some of those to Mondays, following concerns that were in part about absenteeism among government workers when a holiday fell midweek. But lawmakers also noted clear benefits to the economy, including boosts in retail sales and travel on three-day weekends.

The Uniform Monday Holiday Act took effect in 1971, moving Presidents Day to the third Monday in February. Sales campaigns soared, historian C. L. Arbelbide wrote in Prologue.

Bruggeman said Washington and the other Founding Fathers “would have been deeply worried” by how the holiday became taken over by commercial and private interests.

“They were very nervous about corporations,” Bruggeman said. “It wasn’t that they forbade them. But they saw corporations as like little republics that potentially threatened the power of The Republic.”

Coe, who is also a fellow at the Washington think tank New America, said by now the day is devoid of recognizable traditions.

“There’s no moment of reflection,” Coe said. Given today’s widespread cynicism toward the office, she added, that sort of reflection “would probably be a good idea.”

meaning articles of partnership

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Ruby Franke and Jodi Hildebrandt sentenced to up to 30 years in prison in child abuse case

By Kerry Breen

Updated on: February 20, 2024 / 3:17 PM EST / CBS News

Parenting YouTuber Ruby Franke and her business parter Jodi Hildebrandt, who pleaded guilty to child abuse charges that stemmed from one of Franke's children  escaping Hildebrandt's house  in August to beg a neighbor for help, have been sentenced to prison. Each could serve as much as 30 years, the prosecutor said after the hearing, the most severe penalty available under Utah law.

Franke has been sentenced to four consecutive prison terms, CBS News affiliate KUTV reported Tuesday , which could range from one to 15 years each. The Utah Board of Pardons and Parole will determine prison time, KUTV reported. Franke has 30 days to appeal the decision. 

Hildebrandt received the same sentence of four consecutive prison terms, KUTV reported, which could again range from one to 15 years each. Like Franke, Hildebrandt's prison time will be determined by the Utah Board of Pardons and Parole.

Franke, who gave parenting advice on her now-defunct "8 Passengers" YouTube channel, and Hildebrandt, who operated a counseling business called ConneXions Classroom, were each initially charged with six counts of aggravated child abuse, a second-degree felony. Each count carried a potential penalty of one to 15 years in prison and a fine of up to $10,000. 

While reading the sentencing recommendation, state prosecutor Eric Clarke compared the environment Franke's children faced to a "concentration camp-like setting," and said that Franke "committed horrible acts of child abuse." While addressing Hildebrandt's charges, Clarke called her a "significant threat" to the community. 

Both women addressed the court before their sentencings, with Hildebrandt saying that she would "submit to what the state feels is an appropriate amount of time served." Franke admitted that she and Hildebrandt had "inflicted the injuries" on her children. She said that she had been "led to believe that this world is an evil place" and that Hildebrandt had never been her "business responsibility," but that she had paid the other woman to be her mentor. Franke also thanked public safety officials who rescued her children, calling them "angels," according to KUTV. 

"My charges are just," Franke said. "They offer safety to my family, accountability to the public." 

What did Ruby Franke and Jodi Hildebrandt do? 

In December, Franke  pleaded guilty to four counts of child abuse  and admitted that she tortured her children, including the now 12-year-old boy who escaped Hildebrandt's home. In the plea agreement, which contained graphic details of abuse, Franke said her son was often kept bound, and that her nine-year-old daughter was made to do manual labor outside in the hot sun with no water or shoes. Both children were often told they were possessed and that their punishments were necessary to help them. 

The boy told officials that Hildebrandt had tied him up and used home remedies to treat wounds caused by the restraints, according to court documents reviewed by KUTV . 

As part of her plea deal, Franke agreed to serve a prison term and agreed that her sentences would run consecutively. She also agreed to testify against Hildebrandt. 

Hildebrandt also pleaded guilty , just days after Franke, to four counts of child abuse. Her plea agreement stated that she either tortured the children or was aware of the abuse. The agreement also stated that Hildebrandt "either physically forced or coerced" Franke's daughter to "jump into a cactus multiple times." 

The crimes were motivated by their religious faith, said Washington County Attorney Eric Clarke in a statement.

"This is a case about religious extremism. The defendants appear to have fully believed that the abuse they inflicted was necessary to teach the children how to properly repent for imagined 'sins' and to cast the evil spirits out of their bodies," Clarke said. "Hildebrandt regularly stated that God communicated directly with her and gave her directions. Franke accepted Hildebrandt as her leader and followed her instructions and guidance." 

Where is Ruby Franke's family now? 

Even before the criminal charges, Franke was criticized on YouTube for her harsh punishments towards her children, including once banning one of her children from his bedroom for seven months because he pranked his younger brother.  The YouTube channel, which began in 2015, ended after seven years. 

Franke's husband, Kevin Franke, has filed for divorce. In early September, a lawyer for Kevin Franke told CBS News that he was representing his client's interests in keeping his children together and in his care and that he could not comment on Ruby Franke's arrest. 

Kevin Franke appeared in court Friday alongside Franke's two eldest children. While speaking from the stand, Franke apologized to her former husband. "You are the love of my life," she said, according to KUTV. "The ending of our marriage is a tragedy."

Franke's parents and brother both filed statements with the court ahead of her sentencing Tuesday, blaming Hildebrandt's influence for her actions. Franke's brother Beau Griffiths said that he had also been enrolled in Hildebrandt's ConneXions program.

"At the continued encouragement of Ms. Hildebrandt, Ruby systematically pushed those around her away, first myself, and then our sisters, parents, and close friends, and then her husband, and finally her own children," Griffiths said in part. "Ruby has clearly been brainwashed. She has been taken advantage of by Ms. Hildebrandt." 

Franke's sisters,  Julie Griffiths Deru  and  Bonnie Hoellein , YouTubers themselves,  shared videos detailing  Franke's separation from the family and stating that they were not aware of her actions. 

Franke's parents, Chad and Jennifer Griffiths, said in their statement to the court that for three years they only had "brief communications" with their daughter, where she "accused us of either things that never happen or she grossly exaggerated the events that did." 

"She was delusional," they said, according to KUTV. "She was so deeply brainwashed we could not recognize her." 

  • Child Abuse

Kerry Breen

Kerry Breen is a reporter and news editor at CBSNews.com. A graduate of New York University's Arthur L. Carter School of Journalism, she previously worked at NBC News' TODAY Digital. She covers current events, breaking news and issues including substance use.

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What Is a General Partnership?

  • How It Works
  • Key Aspects
  • Advantages and Disadvantages
  • General Partnership FAQs

The Bottom Line

  • Types of Corporations

General Partnerships: Definition, Features, and Example

meaning articles of partnership

Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

meaning articles of partnership

Investopedia / Michela Buttignol

A general partnership is a business arrangement by which two or more individuals agree to share responsibilities, assets, profits, and financial and legal liabilities of a jointly-owned business.

In a general partnership, partners agree to be personally responsible for potentially unlimited liability . Liabilities are not capped as they would be in, say, a partnership formed as a limited liability partnership or a limited liability company (LLC) . Partners are responsible for the debts, and the seizure of an owner's assets is a possibility. Furthermore, any partner may be sued for the business's debts.

Since a general partnership is a pass-through entity where income flows straight to the owners, each partner reports their share of partnership profits or losses on their personal tax returns. The partnership itself is not taxed.

Key Takeaways

  • A general partnership is a business made up of two or more partners, each obligated for the business's debts, liabilities, and assets.
  • Partners assume unlimited liability, potentially subjecting their personal assets to seizure if the partnership becomes insolvent.
  • Partners should create a written partnership agreement.
  • General partnerships are less expensive to form compared to a corporation.
  • They are pass-through entities where profits or losses are passed directly to partners, who report them on their personal tax returns.

Understanding General Partnerships

General partnerships are unincorporated businesses. Those who form a general partnership don’t need to register their business with a state to function legally.

General partnerships offer the flexibility to structure businesses however partners see fit. This gives those partners the ability to control operations more closely.

In turn, this allows for more swift and decisive management action compared to corporations, which must often deal with multiple levels of bureaucracy and red tape, complicating and slowing down the implementation of new ideas.

A general partnership must satisfy the following conditions:

  • It must include a minimum of two people.
  • All partners must agree to be personally liable for any and all liabilities that their partnership may incur.

Aspects of a General Partnership

Partnership agreement.

The partnership should have a formal, written partnership agreement , though oral agreements are valid. The partnership agreement details such things as the business's governing structure, the partners' rights and responsibilities, and how profits should be allocated.

It can also state what should happen when a partner leaves, dies, or otherwise becomes unable to function as a partner. For example, the agreement may stipulate that a deceased partner's interest is transferred to the surviving partners or a successor.

Ideally, the partnership will have created its own agreement that addresses among other things, the topic of management and control.

However, if the partnership has no agreement that sets forth how the partnership should be managed and who should manage it, it can follow the directives in the Revised Uniform Partnership Act (RUPA) , which most states have adopted. The act provides a standard of governance for partnerships. It defines:

  • How a partnership is created
  • The rights and duties of partners
  • Partnership assets and liabilities
  • Fiduciary duties of partners and the partnership
  • Profit allocations and voting rights

Individual Decision-Making

In a general partnership, each partner has the agency to unilaterally enter into binding agreements and business deals, and all other partners are bound by the terms.

Not surprisingly, such activities may lead to disagreements. As a result, many successful general partnerships build conflict resolution mechanisms into their partnership agreements.

In some cases, the partners agree only to proceed with major decisions if there's either a complete consensus or a majority vote. In other cases, the partners designate non-partner appointees to manage the partnerships, similar to a company's board of directors. In any case, broad agreement is essential because when all partners have unlimited liability, even innocent players can be fiscally on the hook for inappropriate or illegal actions.

Compensation

Rather than a salary, partners receive distributions from the partnership’s profits. These distributions should be in accord with the allocation of profits detailed in the partnership agreement. If the partnership has no agreement, profits should be equally distributed according to RUPA (mentioned above).

Money that the partnership does not distribute to partners can be used for other purposes (e.g., reinvested in the business).

Joint Liability

Partners in a general partnership have shared liability for the debts and obligations of the business. Every partner agrees to unlimited personal liability for their actions, the actions of all other partners, and those of any and all employees.

Therefore, partners have shared responsibility—also known as joint liability—for damages awarded in a legal action taken against the partnership.

Joint and several liability, where someone can sue any partner for actions taken by others, is also a possibility in certain states. Partners must then decide how much each owes.

Fiduciary Duties

Partners have a fiduciary duty to act in the best interest of their partnership. In fact, specific fiduciary duties are key to protecting partners and the business itself. A partner who breaches a fiduciary duty may be personally liable for any harm that breach causes the partnership.

While the partnership, in its agreement, can assert additional fiduciary duties, the main ones are:

Duty of Good Faith and Fair Dealing

Partners must act honestly and fairly in all dealings that pertain to the partnership.

Duty of Loyalty

Partners must not pursue personal activities that can harm the partnership. They must place the partnership’s best interests above personal interests. And they must forego all conflicts of interest that may exist with the partnership due to those personal interests.

Duty of Care

Partners must act prudently and competently when managing the affairs of the partnership. Importantly, if a partner acts with reasonable care and in good faith, they cannot be deemed liable should their activities cause unfavorable results.

Duty of Disclosure

Partners must disclose to other partners any facts and other information they have about risks and consequences that concern or may concern the well-being of the business. If any conflict of interest arises, they must disclose that, too.

As mentioned previously, general partnerships do not pay business income taxes. As pass-through entities, they pass income (and losses) directly to individual partners. The partners must then report their shares of profits or losses on their personal tax returns and pay any taxes owed.

Partners also have to pay taxes on income earned by the partnership that is not distributed (otherwise known as retained earnings ).

A general partnership must complete and provide IRS Form Schedule K-1 to each partner by March 15. A K-1 details each partner's share of business income, losses, credits and deductions. Each partner uses the information within the K-1 to complete their personal tax return. The K-1 does not need to be sent with the tax return to the IRS.

However, because partnership earnings are considered self-employment income, partners will need to include a Schedule SE with their tax return. It is the form used to determine the tax due on net earnings from self-employment. Information on Schedule SE is also used by the Social Security Administration (SSA) to figure your Social Security and Medicare benefits.

The general partnership itself must file Form 1065 with the IRS no later than April 15. Form 1065 is an informational return and involves no payments.

Example of a General Partnership

General partnerships have been the business entity of choice for individuals seeking to work together as well as various types of service providers. That's often due to their straightforward structure, low-cost, and ease of set-up.

For example, law firms, medical practices, and architectural firms often organize themselves as general partnerships. Spouses and other members of families who want to run a business together also set up general partnerships.

Advantages and Disadvantages of a General Partnership

  • A general partnership is less expensive and easier to set up than a corporation or  limited liability partnership (LLP) .
  • Less paperwork is involved. In the United States, filing partnership paperwork with a state is generally not required, though certain registration forms, permits, and licenses may be necessary at the local level.
  • As a pass-through entity, the partnership pays no taxes.
  • No external financial reporting/annual report is required.
  • A general partnership is simple to dissolve.

Disadvantages

  • Personal liability is unlimited. A partner's personal property can be seized to pay partnership debts.
  • With shared liability, partners must deal with the financial and legal consequences of each other's (and employees') actions.
  • Disputes may be difficult to address and disastrous for the business (unless properly planned for in the partnership agreement).
  • Over time, a business can become complicated, encounter greater risks, increase potential personal liability, and outgrow the general partnership structure.

Is a General Partnership the Same As an LLP?

Not exactly. A general partnership and a limited liability partnership are both partnerships and pass-through entities. However, a general partnership involves the potential for the unlimited personal liability of partners for financial and legal obligations. A limited liability partnership (like a limited liability company) limits liability to just what the partner has invested in the business. Their personal assets are protected from seizure.

What Are the Advantages of a General Partnership?

General partnerships can be simple to set up. People can get together, declare that they're a partnership, and start working immediately. In most cases, a general partnership isn't required to register with the state it does business in. Incorporation isn't required, either. It can be dissolved automatically when one partner leaves. And it doesn't pay taxes (though the partners do).

Who Owns a General Partnership?

The partners own the partnership. Ideally, the partnership will create a partnership agreement that, among other things, states who the partners (owners) are as well as the profit allocation percentage for each.

A general partnership is a business with at least two owners, or partners, who agree to share the responsibilities involved in running the business. A partner has unlimited personal liability for any and all debts and obligations of the company. Each partner reports their share of business profits and losses on their individual tax return and pays any taxes due. The partnership itself isn't subject to taxation.

A general partnership is a common type of business due to the fact that it's easy to set up and dissolve. However, a general partnership may need to restructure at some point as it grows and encounters greater business risk so as to limit the exposure to personal financial liability that partners have.

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U.S. Moon Landing: How to Watch and What to Know

If all goes as planned, Odysseus, a private spacecraft, will touch down on the lunar surface on Thursday. It will be the first U.S. moon landing in more than 50 years.

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A view from a spacecraft camera showing its machinery, with a component covered in foil that has the NASA logo, an American flag and the Intuitive Machines logo on it. Earth can be partly seen in the distance below the spacecraft.

By Kenneth Chang

Visit The Times live blog for the latest information on the Odysseus moon lander’s journey , including an updated landing time.

On Wednesday morning, a robotic lunar lander launched by a Houston company got closer to reaching the moon.

The company, Intuitive Machines, announced that its Odysseus spacecraft had fired its engine for six minutes and 48 seconds, slowing it enough to be pulled by the moon’s gravity into a circular orbit 57 miles above the surface.

On Thursday, it is scheduled to touch down on the moon. If all goes well, it will become the first private spacecraft ever to make a soft landing there and the first American mission to arrive there since Apollo 17 in 1972.

When is the landing and how can I watch it?

Odysseus is expected to land on the lunar surface at 4:24 p.m. Eastern time on Thursday. (Late Thursday morning, Intuitive Machines announced it was moving up the landing time by about an hour, noting also that it had raised the spacecraft’s orbit.)

Although it is a private mission, the main customer is NASA, which paid $118 million for the delivery of six instruments to the moon. NASA TV will stream coverage of the landing beginning at 4 p.m. on Thursday. The Times is providing updates on the landing live in a blog.

Where is the spacecraft going to land?

Odysseus is aiming for a spot in the south polar region, a flat plain outside the Malapert A crater. (Malapert A is a satellite crater of the larger Malapert crater, which is named after Charles Malapert, a 17th-century Belgian astronomer.)

The landing site is about 185 miles from the moon’s south pole.

Some of those craters in that region remain in perpetual shadow, and are a particular area of interest because water ice has been detected in them. Previous American moon missions have landed in the equatorial regions.

How will Odysseus land?

The spacecraft will fire its engine so that the circular orbit changes to an elliptical one, and will drop to within about six miles of the lunar surface. From this point onward in the landing sequence, Odysseus will operate completely on its own. After coasting for an hour, the engine will start up again, and the spacecraft will begin its powered descent. It will have to slow down from its initial speed of about 4,000 miles per hour.

Odysseus will track its position through cameras, matching the patterns of craters with stored maps and measuring its altitude by bouncing laser beams off the surface.

About 1.2 miles from the landing site, the spacecraft will pivot to an upright orientation, with sensors looking for a safe spot.

For the last 50 feet or so of the descent, Odysseus will rely solely on its inertial measurement units, which act as the spacecraft’s inner ear, measuring the forces of acceleration. It will stop using the camera and the altitude-measuring laser to avoid being fooled by dust kicked up by the engine’s exhaust.

What will the lander do on the moon?

Because solar panels provide the spacecraft’s power, its mission will last only about seven days until the sun sets on the landing site. That’s when a two-week long, frigid lunar night begins, and Odysseus was not designed to survive those conditions.

The six NASA instruments carried to the moon by Odysseus and what their tasks are:

A laser retroreflector array that bounces back laser beams.

A LIDAR instrument that precisely measures the spacecraft’s altitude and velocity as it descends to the lunar surface.

A stereo camera that will capture video of the plume of dust produced by Odysseus’ engines during landing.

A low-frequency radio receiver that measures the effects of charged particles on radio signals near the lunar surface, providing information that could aid the design of future radio observation on the moon.

A beacon, Lunar Node-1, that will demonstrate an autonomous navigation system.

An instrument in the propellant tank that uses radio waves to measure fuel levels.

The lander is also carrying other payloads, including a camera built by students at Embry-Riddle Aeronautical University in Daytona Beach, Fla.; a precursor instrument for a future moon telescope; and an art project by Jeff Koons .

How’s the mission going, so far?

Mostly very well.

On Feb. 15, a SpaceX Falcon 9 rocket sent Odysseus on a trajectory toward the moon. After the spacecraft separated, it successfully turned itself on. An initial engine burn to test the propulsion system was postponed because the liquid oxygen propellant took longer to chill down than ground-based tests had predicted.

Engineers adjusted the ignition procedures, and the burn was successfully performed on Feb. 16.

Along the way, the spacecraft transmitted photographs taken of both Earth and the moon.

Flight controllers fired the engine twice more, on Feb. 18 and Feb. 20, to fine-tune the spacecraft’s path to the moon. The second effort was precise enough that the flight controllers decided to skip a planned third correction.

How big is the spacecraft?

The Intuitive Machines lander is a hexagonal cylinder with six landing legs, standing about 14 feet tall and five feet wide. For fans of “Dr. Who,” the science fiction television show, the body of the lander is roughly the size of the Tardis, the time-traveling spacecraft that, on the outside, looks like an old British police telephone booth.

At launch, with a full load of propellant, the lander weighed about 4,200 pounds.

Why isn’t NASA running this mission?

Odysseus is part of NASA’s Commercial Lunar Payload Services program, which allows private companies to send experiments to the moon and spares NASA from building and operating its own moon landers.

The space agency hopes this approach will be much cheaper, letting it send more missions more frequently while it is preparing for U.S. astronauts to return to the moon as part of its Artemis program.

Kenneth Chang has been at The Times since 2000, writing about physics, geology, chemistry, and the planets. Before becoming a science writer, he was a graduate student whose research involved the control of chaos. More about Kenneth Chang

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