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Most business owners are aware of their options; they can run a sole proprietorship, develop a corporation or even collaborate in a partnership. Each option has benefits and disadvantages, but partnerships are incredibility among small businesses.

However, partnerships are a unique structure since there are several types of partnerships for businesses. Entrepreneurs can select a partnership and then choose the model that works best for their company or interests.

General partnership

A general partnership is the most standard ideal of business collaborations; there are two or more people who own the company and share the profits, losses and responsibilities. General partners tend to share equal portions of the business and act in some management capacity. However, as an equal partner, you also share an equivalent part of the debt or legal obligation with the company. It’s a great option for those who want to share a company with their partner legitimately

Limited Partnership

These partnerships are different from general partnerships due to the restriction on personal liability to the amount of their business investment. Limited partners receive profits as they invested in the company, but they do not make management decisions as a general partner would. In limited partnerships, there must be one general partner who acts as the manager and accept liability for the business. It’s a smart move to take a limited partnership if you want to invest without any business control.

Limited Liability Partnership

Limited liability partnerships (LLP) is almost a blend of the two previous partnerships as partners receive similar tax advantages from a general partnership and liability protection from business debts. It usually happens after you establish a general partnership and file for more liability protections with the Bureau of Corporations and Charitable Organizations. The major disadvantage of this form is the process it takes to register as an LLP. But the process is worth it for most companies.

It’s not an easy decision, especially if you have to agree with multiple partners. However, it’s worth working with a professional to ensure you make the right decision for you, your partners and the future of your business.