When a company enters into a partnership, it is a legal process in which two people or entities will share ownership and operation of a business. This may include only two people, but it could also include multiple people as well as organizations. This can look different for every business. Propel Your Accounting is here to take a closer look at what a company partnership looks like.
Different Types of Company Partnerships
There are a few different types of company partnerships.
– General Partnership: In this type of partnership, there are one or more business partners that are considered general partners. They share liability for the business and are both involved in day to day operations.
– Limited Partnership: In this case, there are one or more general partners that operate the business. They will share liability as well. There may also be other limited partners that are functioning as advisors or work as silent investors that don’t carry the burden of liability.
– Limited Liability Partnership: When it comes to this type of partnership, each individual will have limited responsibilities as well as liability for the debts of the partnership.
Difference Between Partnerships & Shareholders
Whether you are a business partner or a shareholder, you will have some sort of ownership in the company. However, if you are a business partner, you will have some sort of control over how the company operates. Your ownership will be based off of an agreement with the other partners. A shareholder will be different as this involves an investor that owns shares in a publicly traded business. They might have a certain degree of influence on the company, but it will be limited. They usually have the power to vote on major company moves. Their influence is also going to depend on how many shares they own. One of the benefits of this type of influence on the company is that they aren’t liable for the actions of the business like a business partner is.
When Partnerships End
Not all business partnerships are long lasting. Sometimes, no matter how hard everyone tries, the partners aren’t able to make things work. When a partnership dissolves, there are forms that need to be filled out documents that need to be filed for state and federal tax purposes as well as applicable state laws. It is vital that you know which forms the IRS needs to have filled out so that you don’t have negative consequences.
Bookkeeping, Accounting, Business Consulting & HR / Admin Services in the United States of America
If you have questions about what it means to be a company partner, you can turn to Propel Your Accounting to answer all the questions that you have. We are here to help you and your business attain success. We will advise you and consult with business owners as well as partners to help the partnership be successful as well. It is our goal to have you succeed. Call us today!
