What is a partnership in a business context?

A partnership in a business context refers to a business structure where two or more individuals collaborate and share ownership, responsibilities, and profits. This arrangement allows partners to combine their skills, resources, and capital to operate a business effectively. Each partner typically contributes to the business and has a role in its decision-making processes.

The characteristics of a partnership include shared management and joint liability, meaning that all partners are personally responsible for the business debts and obligations. This structure is common in various types of businesses, from professional services like law firms and accounting practices to small enterprises seeking to leverage the strengths of multiple individuals.

In contrast, a business owned by one person represents a sole proprietorship, which does not involve shared decision-making or shared profits. A franchise is a different business model where a franchisee pays for the rights to operate under the branding of a franchisor, and it often involves more regulations and support from the parent business, while multiple stakeholders may not be involved as owners. Lastly, a corporation is a separate legal entity owned by shareholders, leading to limited liability for its owners, which is fundamentally different from a partnership's structure and obligations.