Partnership
A partnership is a business arrangement in which two or more people own the business, have invested in it, and share the profits and liabilities. It differs from a corporation in that it is not considered a separate entity from the individual owners.
There are various arrangements of partnership:
- General partnership: Partners manage the operations of the partnership and have liability for any debts.
- Limited partnership: There is one general partner and one or more limited partners who invest but do not contribute to managing the business, and do not have liability for it.
- Limited liability partnership: This is similar to a limited partnership, but may have more than one general partner.
- Equity partnership: This is a means of allocating the returns among participants, reflecting levels of risk and reward.
- Salaried partnership: This is a means of allocating returns through salaries.
- Public Private Partnership (PPP): Very broad range of partnership where the public and private sectors collaborate for some mutual benefit.
There can also be different levels of partners, i.e. junior and senior, that have different types of duties, responsibilities as well as levels of investment, business ownership and management opportunity.
Not to be confused with partnership, is partnering. This is a broad term used to describe a collaborative management approach that encourages openness and trust between parties to a contract. Partnering can be adopted for a one-off project, or can be a long-term relationship over a number of projects (such as a framework agreement). For more information, see Partnering.
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