There are three types of partnership business. They are a general, limited, and joint venture. All of them are described with their characteristics:
Table of Contents
Types of the partnership business
In a general partnership, at least one partner has unlimited liability. A general partner has the authority to act and make binding decisions as an owner. The general partner may be liable for all the debts of the business.
Characteristics of General Partnership Business
- The minimum number of members is 2 and a maximum of 20.
- All partners are legally equal.
- All partners are liable for the business debts.
- No term of duration is fixed i.e. it may be dissolved by any partner at any time by giving notice writing to all other partners of his intention to dissolve the partnership.
General partnership business can be divided into two types
Partnership-at-will: A partnership-at-will is one, which has been formed for a fixed term, or one, which was originally formed for a fixed term, but has been continued after the expiry of that term without further agreement.
Specific partnership: Specific partnership refers to that in which there is a partnership with regard to a solitary commercial undertaking or adventure. This partnership business has a limited lifetime.
A partnership with at least one general partner and one or more limited partners who are liable for loss only up to the amount of their investment is called a limited partnership.
In a limited partnership business, the general partners arrange and run the business while the limited partners are investors only. The limited partners have limited liability.
Characteristics of Limited partnership Business
- It consists of one or more general partners who are liable for all debts and obligations of the firm.
- It must have at least one limited partner who contributes a certain amount of capital. He shall be liable only for that amount of capital contributed by him.
- A limited partner is not entitled to take part in the management of the partnership business and cannot bind the firm. He can simply inspect the books of accounts and offer advice.
- In case a limited partner takes part in the management of the firm, he shall be liable for all debts and obligations incurred when he so acted.
- Every limited partnership must be registered.
A partnership is established for a specific project or for a limited time.
Other Content of Partnership Business:
- What is a Partnership Business?
- Elements of Partnership Business
- Features / Characteristics of Partnership Business
- Importance of Partnership Agreement
- Contents of Partnership Agreement
- Advantages and Disadvantages of Partnership Business
- Different Kinds of Partners
- Registration of Partnership Business
- Consequences / Effects of Partnership Registration
- Dissolution of Partnership Business