In daily business, you are certainly no stranger to the term partnership or partnership. This concept is used to describe a business that is run between two or more parties. Each partner has their own responsibilities that affect the operational and financial aspects of a business. In return, each party will also get the profit generated from the business.

 

A partnership aka business cooperation is not a legal business entity. When you want to collaborate, you and your potential partner do not have to register it with the government, but simply fill out the work agreement that has been agreed with the partner. So, what types of partnerships can you run as an entrepreneur? Here’s the explanation!

 

1. General Partnership                           

This partnership is the most common form of business cooperation. General partnerships do not require you to have a business entity that is officially registered in the state. You see, you and your business partners can immediately form a partnership after signing the partnership agreement. Meanwhile, the ownership and profit of the business will also be shared among the parties involved. In a general partnership, each partner has its own authority to be bound by a business agreement. They also have different liabilities which means each has its own responsibilities and obligations.

 

2. Limited Partnership

Limited Partnership (LP) is a type of business partnership that is formal and has been authorized by the state. At least, limited partnership actors have one general partner who is responsible for managing the business and has one or more limited partners who support funding, but do not actively manage the business. In other words, the limited partnership will invest their funds and then make a profit from it. However, they are not responsible for any debts or liabilities.

 

3. Limited Liability Partnership

A limited liability partnership (LLP) works like a general partnership. So, every party involved in the partnership will be actively involved in the business. However, keep in mind that each other has different responsibilities based on their respective roles. Meanwhile, each party running a limited liability partnership can also be responsible for legal liabilities and debts contained in the business. However, each party is not responsible for mistakes made by the other party.

 

4. Limited Liability Limited Partnership

Limited Liability Limited Partnership (LLLP) is a type of partnership that can be done in several states in America. Some examples of these states are Arizona, Alabama, Utah, Ohio, New Mexico, Florida, and Georgia. The way an LLLP works is similar to a Limited Partnership (LP) which has at least one general partner to manage the business. However, LLLP limits the general partner’s liability. So, each partner has their own liability protection. LLLP can be formed from LP based on a decision that has been agreed upon by each party involved.

 

Through partnerships, business actors can support each other to achieve their goals and generate maximum profits. Of course, in running a partnership, there are several things that need to be considered, for example, having the same type of work and fulfilling responsibilities as a partner. That way, the business that you do not only get a satisfying profit, but also can develop and expand relationships with business partners and customers.

 

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