Partnership: Definition, How It Works, Taxation, and Types

What Is a Partnership? A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits. There are several types of partnership arrangements. In particular, in a partnership business, all partners share liabilities and profits equally, while in others, partners may have limited liability. There also is the so-called "silent partner," in which one party is not involved in the day-to-day operations of the business.Key TakeawaysA partnership is an arrangement between two or more people to oversee business operations and share its profits and liabilities.In a general partnership company, all members share both profits and liabilities.Professionals like doctors and lawyers often form a limited liability partnership.There may be tax benefits to a partnership compared to a corporation. Types of Partnerships In a broad sense, a partnership can be any endeavor undertaken jointly by multiple parties. The parties may be governments, nonprofits en...