What are Partnerships?

Partnerships are a form of carrying on business. Partnerships (and their legal elements) vary from jurisdiction to jurisdiction.

Generally, a partnership is described as two or more legal persons that enter into a business venture together with a view to profit.

Unlike corporations, which are separate legal persons from their shareholders, partnerships are not separate legal entities or separate legal persons from the partners. This has consequences in the tax, governance, ongoing existence and capitalization of partnerships.

Here are some differences between partnerships and corporations:

• Unlike corporations, partnership profits flow through to the partners and are taxed only to the partners, not the partnership itself.
• Partnerships are typically governed by separate legislation or statute and, amongst the partners, the governance relationship is typically outlined in a partnership agreement.
• Unlike corporations, partnerships do not benefit from perpetual existence.
• Unlike corporations that issue share capital to shareholders, partnerships typically issue units to partners.

There are many forms of partnerships that exist, some of the most common forms of partnerships being:

• General Partnership
• Limited Partnership
• Limited Liability Partnership