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What types of partnerships can Virginians establish?

On Behalf of | Aug 3, 2018 | Business Law

When two entrepreneurs in Richmond join forces to establish a partnership, they often have grand dreams of business success. And, many do see their partnership grow into a profitable business. Partnerships are a popular type of business entity that is relatively easy to establish. There are three types of partnerships entrepreneurs can select when forming their business.

One is a general partnership. In this business entity, all the partners to the business will divide the profits and duties of the business equally. Another type of partnership is a joint venture. These businesses are run in the same manner as a general partnership, but they are limited to a single project. If a joint venture continues operations a second time, it may be considered a general partnership.

Finally, there is a limited partnership. In this business entity, there are two types of partners: managing partners and limited liability partners. The managing partners execute the daily operations of the partnership and are personally liable for any successes or failures the partnership sees. Limited partners are those who only invest money in the business. If the business fails, all they will lose is their investment.

While there are a variety of partnerships to choose from, making the choice between them is not always easy. Partners must come to an agreement on how they envision their business running in the future, and what role they want to play in its management. Moreover, they must understand whether and how they will be personally liable for the acts of the business. Therefore, establishing a partnership takes a firm understanding not just of the laws regarding liability, but also any business laws and regulations the partners must follow when forming their business. Therefore, before proceeding, potential business partners may want to make sure they have the information necessary to understand the legal aspects of forming a partnership, so they do not run afoul of the law.