Partnership

Business, Legal & Accounting Glossary

Definition: Partnership


Quick Summary of Partnership


Two or more persons in business together with the aim of making a profit.
A type of business where the profits and losses are shared by each of the people involved. Rules for partnerships vary from country to country, and from industry to industry.




What is the dictionary definition of Partnership?

Dictionary Definition


The state of being a partner or partners.

  1. The state of being associated with a partner.
  2. An association of two or more people to conduct business.
  3. A cooperative relationship between people or groups who agree to share responsibility for achieving some specific goal.
    Effective language learning is a partnership between school, teacher and student.
    The action teams worked in partnership with the government.
  4. The members of a business venture created by contract.
  5. A contract between two or more persons who agree to pool talent and money and share profits or losses.

Full Definition of Partnership


n. a business enterprise entered into for profit which is owned by more than one person, each of whom is a “partner.” A partnership may be created by a formal written agreement, but may be based on an oral agreement or just a handshake. Each partner invests a certain amount (money, assets and/or effort) which establishes an agreed-upon percentage of ownership, is responsible for all the debts and contracts of the partnership even though another partner created the debt or entered into the contract, has a share in management decisions, and shares in profits and losses according to the percentage of the total investment. Often a partnership agreement may provide for certain division of management, shares of investment, profit and/or rights to buy out a partner upon leaving the partnership or death. Each partner owes the other partners a duty of full disclosure of information which affects the business and cannot commandeer for himself/herself business opportunities which rightfully belong to the partnership. A partnership which does business under a trading name must file with the county or state a certificate of “doing business under a fictitious name,” which gives notice to the public of the names of partners and the business address. A “limited partnership” limits the responsibility for debts beyond the investment to the managing “general partners.” The investing “limited partners” cannot participate in management and are limited to specific percentages of profit. A partnership differs from a “joint venture,” which involves more than one investor for only a specific short-term project and prompt division of profits. Partnerships are traditionally the most fragile of business arrangements and are often dissolved and subject to disputes. But several million exist in the United States and, ironically, they are the favourite business entity for law firms.

A type of business where the profits and losses are shared by each of the people involved. Rules for partnerships vary from country to country, and from industry to industry. See also: General partnership.

When used without a qualifier such as “limited” or “limited liability,” usually refers to a legal structure called a general partnership. This is a business owned by two or more people (called partners or general partners) who are personally liable for all business debts. To form a partnership, each partner normally contributes money, valuable property or labor in exchange for a partnership share, which reflects the amount contributed. Partnerships are easy to form since no registration is required with any governmental agency to create a partnership (although tax registration and other requirements to conduct business may still apply). Although not required, it is an excellent idea to prepare a written partnership agreement between the partners to define items such as ownership percentages, how profits and losses will be divided and what happens if a partner dies or becomes disabled. Partnerships themselves do not pay federal or state income taxes; rather, profits are passed through to partners who report and pay income taxes on their personal returns. See also limited partnership; limited liability partnership.


Examples of Partnership in a sentence


Those two started their software company as a partnership, and when they sold the company to Microsoft, they split the profits evenly.
The stakeholders’ partnership with the company limits their potential loss to the amount they invested.
Effective language learning is a partnership between school, teacher and student.
The action teams worked in partnership with the government.


Synonyms For Partnership


association, cooperation, partner, union

Cite Term


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Page URL
https://payrollheaven.com/define/partnership/
Modern Language Association (MLA):
Partnership. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. August 06, 2021 https://payrollheaven.com/define/partnership/.
Chicago Manual of Style (CMS):
Partnership. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/partnership/ (accessed: August 06, 2021).
American Psychological Association (APA):
Partnership. PayrollHeaven.com. Retrieved August 06, 2021, from PayrollHeaven.com website: https://payrollheaven.com/define/partnership/

Definition Sources


Definitions for Partnership are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 29th April, 2020 | 14 Views.