A business is a partnership when the profits and losses are divided among two or more co-owners. Each owner contributes money, ideas, or property and shares in the personal liability, management rights, and profits, as dictated by the type of partnership the business assumes: limited liability, limited, or general. Understanding your available options with regard to partnerships will help ensure your business is properly structured while making you aware of your personal obligations.

Below, the New Haven, CT, business law attorneys from Zangari Cohn Cuthbertson Buhl & Grello P.C. discusses the three main partnership types:

• General Partnership: In a general partnership, management rights and liability responsibilities are split between two or more general partners. If a partner is sued, the other partners share in the liability. Likewise, should the business takes on excessive debt, each partner must assume responsibility. While such personal liability can be undesirable, there is a significant tax advantage: partnership profits pass through to the partners rather than being taxed to the business. This allows partners to include business gains on their personal taxes at a much lower rate.
• Limited Partnership: In a limited partnership, general and limited partners determine their personal liability through business investments. Limited partners are not typically involved in management of the partnership and enjoy limited liability, often serving as investors who wish to share in the business profits.
• Limited Liability Partnership: A limited liability partnership (LLP) benefits from the same tax advantages as a general partnership while providing liability protection to each of the partners. In an LLP, partners are not liable for the legal problems of other partners or responsible for debts incurred by the business.

Whether you’re starting a business or looking to modify an existing partnership, a business law attorney from Zangari Cohn Cuthbertson Duhl & Grello P.C. will provide you with the guidance, advice, and resources you need to succeed. Focusing on business succession, business acquisitions, employment law, civil disputes, and more, their legal team has been providing clients with expert legal counsel since 1946. Visit them online or call their New Haven office at (203) 789-0001 to schedule a consultation with a business law attorney today or visit one of our three locations   New Haven, CT, Hartford, CT, and Providence, RI.