From Wikipedia, the free encyclopedia Partnership
Partnership
A partnership is an arrangement where parties agree to nerships are often strongly regulated via anti-trust laws,
cooperate to advance their mutual interests.[1] so as to inhibit monopolistic practices and foster free
Since humans are social beings, partnerships be- market competition. Governmentally recognized domes-
tween individuals, businesses, interest-based organiza- tic partnerships typically enjoy tax benefits, as well.
tions, schools, governments, and varied combinations
thereof, have always been and remain commonplace. In
the most frequently associated instance of the term, a
Definition in civil law
partnership is formed between one or more businesses
in which partners (owners) co-labor to achieve and share
profits and losses (see business partners). Partnerships
are also common regardless of and among sectors. Non-
profit, religious, and political organizations, may partner
together to increase the likelihood of each achieving
their mission and to amplify their reach. In what is usu-
ally called an alliance, governments may partner to
achieve their national interests, sometimes against allied
governments who hold contrary interests, such as oc-
curred during World War II and the Cold War. In educa-
tion, accrediting agencies increasingly evaluate schools Companies law
by the level and quality of their partnerships with other
Company · Business
schools and a variety of other entities across societal sec-
tors. Partnerships also occur at personal levels, such as Business entities
when two or more individuals agree to domicile together, Sole proprietorship
while others are not only personal but private, known Partnership
only to the involved parties. (General · Limited · LLP)
Partnerships present the involved parties with spe- Corporation
cial challenges that must be navigated unto agreement. Cooperative
Overarching goals, levels of give-and-take, areas of re-
sponsibility, lines of authority and succession, how suc- United States
cess is evaluated and distributed, and often a variety of S corporation · C corporation
other factors must all be negotiated. Once agreement is LLC · LLLP · Series LLC
reached, the partnership is typically enforceable by civil Delaware corporation
law, especially if well documented. Partners who wish to Nevada corporation
make their agreement affirmatively explicit and enforce- Massachusetts business trust
able typically draw up Articles of Partnership. Delaware statutory trust
While partnerships stand to amplify mutual interests Benefit corporation
and success, some are considered ethically problematic.
When a politician, for example, partners with a corpo- UK / Ireland / Commonwealth
ration to advance the corporation’s interest in exchange Limited company
for some benefit, a conflict of interest results. Outcomes (by shares · by guarantee
for the public good may suffer. Public · Proprietary)
Partnerships may enjoy special benefits in tax poli- Unlimited company
cies. Among developed countries, for example, business Community interest company
partnerships are often favored over corporations in tax-
European Union / EEA
ation policy, since dividend taxes only occur on profits
before they are distributed to the partners. However, de- SE · SCE · SPE · EEIG
pending on the partnership structure and the jurisdic-
Elsewhere
tion in which it operates, owners of a partnership may
be exposed to greater personal liability than they would
as shareholders of a corporation. In such countries, part-
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From Wikipedia, the free encyclopedia Partnership
AB · AG · ANS · A/S · AS · GmbH Partnerships may be formed in forms of the General Part-
K.K. · N.V. · Oy · S.A. · more nership (Offene Handelsgesellschaft, OHG) or Limited
Partnership (Kommanditgesellschaft, KG). A partnership
Doctrines can be formed by only one person. In the OHG, all part-
Corporate governance ners are fully liable for the partnership’s debts, whereas
Limited liability · Ultra vires in the KG there are general partners with unlimited li-
Business judgment rule ability and limited partners whose liability is restricted
Internal affairs doctrine to their fixed contributions to the partnership. Although
De facto corporation and a partnership itself is not a legal entity, it may acquire
corporation by estoppel rights and incur liabilities, acquire title to real estate and
Piercing the corporate veil sue or be sued
Rochdale Principles
China
Related areas
Main article: Partnership (China)
Contract · Civil procedure In mainland China, a partnership enterprise encompass-
es two types of partnerships：general partnerships and
Accountancy limited partnerships.[2] A general partnership comprises
Key concepts
general partners who bear joint and several liabilities
for the debts of the partnership enterprise.[2] There is a
Accountant · Accounting period · Bookkeeping · Cash and special general partnership which can be employed by
accrual basis · Cash flow management · Chart of accounts ·
professional service providers such as accountant firms
Journal · Special journals · Constant Item Purchasing Power
Accounting · Cost of goods sold · Credit terms · Debits and and law firms. A limited partnership enterprise includes
credits · Double-entry system · Mark-to-market accounting · general partners and limited partners where the limited
FIFO & LIFO · GAAP / IFRS · General ledger · Goodwill · partners are liable only to the extent of their capital con-
Historical cost · Matching principle · Revenue recognition · tributions.[2]
Trial balance
Fields of accounting Japan
Cost · Financial · Forensic · Fund · Management · Tax The Japanese civil code provides for partnerships by con-
tract, which are commonly known as nin’i kumiai (任意
Financial statements 組合) or "voluntary partnerships." A more recent statute
Statement of financial position · Statement of cash flows · has allowed for the creation of limited liability partner-
Statement of changes in equity · Statement of ships.
comprehensive income · Notes · MD&A · XBRL One form of partnership unique to Japan is the
Auditing tokumei kumiai or "anonymous partnership," in which
partners have limited liability so long as they remain
Auditor’s report · Financial audit · GAAS / ISA · Internal
anonymous in their capacity as partners and do not par-
audit · Sarbanes–Oxley Act
ticipate in the operation of the partnership. Japan pro-
Accounting qualifications vides for partnership-like corporations called mochibun
CA · CPA · CCA · CGA · CMA · CAT · CFA · CIIA · CIA · CTP
kaisha.
A partnership is a nominate contract between individuals Netherlands
who, in a spirit of cooperation, agree to carry on an en- Accountants in the Netherlands organized themselves
terprise; contribute to it by combining property, knowl- for the first time as partnerships in 1890 when two single
edge or activities; and share its profit. Partners may have proprietorships bundled their efforts to form a partner-
a partnership agreement, or declaration of partnership ship. The event was followed by numerous other events,
and in some jurisdictions such agreements may be regis- including additional consolidation and entrepreneur-
tered and available for public inspection. In many coun- ship, mergers and acquisitions, internationalization reg-
tries, a partnership is also considered to be a legal entity, ulatory and economic discontinuities that changed the
although different legal systems reach different conclu- sector dramatically. Partnerships differ from private and
sions on this point. public corporations in that all partners are fully respon-
sible for decisions made by any of the partners. A histor-
Germany ical and organizational study of accounting partnerships
Main article: Kommanditgesellschaft in The Netherlands over the period 1890-1990 showed
that partnerships benefit greatly from supplementing
2
From Wikipedia, the free encyclopedia Partnership
partners with associates ( the ratio of partners to associ- • In Common – meaning there must be some mutuality
ates refers to "leverage’ and greatly impacts the partner- of rights, interests and obligations;
ships survival odds, but only partners as so called resid- • View to Profit – thus charitable organizations cannot
ual claimants are liable for the conduct and performance be partnerships (charities are typically incorporated
of the partnership as firm). Also the heterogeneity of the associations under Associations Incorporations Act 1981
partners as a group of professionals benefits from com- (Vic))
positional effects such as homogeneity in experience and Partners share profits and losses. A partnership is basi-
other demographic characteristics. [3] cally a settlement between two or more groups or firms
in which profit and loss are equally divided
Common law United Kingdom limited partnership
Under common law legal systems, the basic form of part- Main articles: UK partnership law and Limited Partner-
nership is a general partnership, in which all partners ship Act 1907
manage the business and are personally liable for its A limited partnership in the United Kingdom consists of:
debts. Two other forms which have developed in most • One- twenty people (except in solicitors and banks)
countries are the limited partnership (LP), in which cer- called general partners, who are liable for all debts
tain limited partners relinquish their ability to manage and obligations of the firm; and
the business in exchange for limited liability for the part- • One or more people called limited partners, who
nership’s debts, and the limited liability partnership contribute a sum/sums of money as capital, or
(LLP), in which all partners have some degree of limited property valued at a stated amount. Limited partners
liability. are not liable for the debts and obligations of the
There are two types of partners. General partners firm beyond the amount contributed.
have an obligation of strict liability to third parties inju- Limited partners may not:
red by the Partnership. General partners may have joint • Draw out or receive back any part of their
liability or joint and several liability depending upon cir- contributions to the partnership during its lifetime;
cumstances. The liability of limited partners is limited to or
their investment in the partnership. • Take part in the management of the business or have
A silent partner is one who still shares in the profits power to bind the firm.
and losses of the business, but who is uninvolved in its If they do, they become liable for all the debts and obliga-
management, and/or whose association with the busi- tions of the firm up to the amount drawn out or received
ness is not publicly known; these partners usually pro- back or incurred while taking part in the management, as
vide capital. the case may be.
Hong Kong India and Pakistan
Main article: Partnership (Hong Kong) According to section 4 of the Partnership Act of 1932,
A partnership in Hong Kong is a business entity formed which applies in both India and Pakistan, "Partnership
by the Hong Kong Partnerships Ordinance, which defines is defined as the relation between two or more persons
a partnership as "the relation between persons carrying who have agreed to share the profits and losses accord-
on a business in common with a view of profit" and is not ing to their ratio of business run by all or any one of them
a joint stock company or an incorporated company.[4] If acting for all". This definition superseded the previous
the business entity registers with the Registrar of Com- definition given in section 239 of Indian Contract Act
panies it takes the form of a limited partnership defined 1872 as – “Partnership is the relation which subsists be-
in the Limited Partnerships Ordinance.[5] However, if this tween persons who have agreed to combine their prop-
business entity fails to register with the Registrar of Com- erty, labour, skill in some business, and to share the prof-
panies, then it becomes a general partnership as a de- its thereof between them”. The 1932 definition added the
fault.[5] concept of mutual agency.
A partnership firm is not a legal entity apart from
Australia the partners constituting it. It has limited identity for the
Main article: Partnership (Australia) purpose of tax law as per section 4 of the Partnership Act
Summarising s. 5 of the Partnership Act 1958 (Vic) (here- of 1932.[6]
inafter the "Act"), for a partnership in Australia to exist,
four main criteria must be satisfied. They are: USA
• Valid Agreement between the parties; Main article: Partnership taxation in the United States
• To carry on a business – this is defined in s. 3 as "any The federal government of the United States does not
trade, occupation or profession"; have specific statutory law governing the establishment
3
From Wikipedia, the free encyclopedia Partnership
of partnerships. Instead, each of the fifty states as well • Corporation
as the District of Columbia has its own statutes and com- • Equity partner
mon law that govern partnerships. These states largely • General partnership
follow general common law principles of partnerships • Joint venture
whether a general partnership, a limited partnership or • Keiretsu
a limited liability partnership. In the absence of applica- • Limited liability partnership (LLP)
ble federal law, the National Conference of Commission- • Limited partnership (LP)
ers on Uniform State Laws has issued non-binding mod- • Partnership accounting
els laws (called uniform act) in which to encourage the • Partnership taxation
adoption of uniformity of partnership law into the states • Strategic Alliance
by their respective legislatures. This includes the Uni- • Types of business entity
form Partnership Act and the Uniform Limited Partner-
ship Act. Although the federal government does not have
specific statutory law for establishing partnerships, it has
Notes
an extensive and hyperdetailed statutory scheme for the [1] http://www.uberstudent.org/mod/resource/
taxation of partnerships in the Internal Revenue Code. view.php?id=27
The IRC is Title 26 of the United States Code wherein [2] ^ Partnership Enterprise Law, Chapter 1, article2
Subchapter K of Chapter 1 creates tax consequences of [3] Johannes M Pennings and Filippo Wezel, 2009,
such great scale and scope that it effectively serves as a Human Capital, Interfirm Mobility and
federal statutory scheme for governing partnerships. Organizational Evolution. Oxford: Elgar
[4] Hong Kong Partnerships Ordinance, Chapter 38,
section 3
Islamic Law [5] ^ Hong Kong Limited Partnerships Ordinance,
Main article: Qirad Chapter 37, section 4
The Qirad and Mudarabas institutions in Islamic law and [6] "Indian Partnership Act, 1932".
economic jurisprudence were the precursors to the mod- http://www.dateyvs.com/gener04.htm. Retrieved
ern limited partnership. These were developed in the 4 December 2010.
medieval Islamic world, when Islamic economics flour- [7] Jairus Banaji (2007), "Islam, the Mediterranean and
ished and when early trading companies, big businesses, the rise of capitalism", Historical Materialism 15 (1):
contracts, bills of exchange and long-distance interna- 47–74, Brill Publishers.
tional trade were established.[7] [8] Robert H. Hillman, "Limited Liability in Historical
In medieval Italy, a business organization known as Perspective", (Washington and Lee Law Review,
the commenda appeared in the 10th century. As an in- Spring 1997)
stitution, the commenda is very identical to the qirad
but whether the qirad transformed into the commenda,
or the two institutions evolved independently cannot be
External links
stated with certainty.[8] • Reference for Business 2nd edition article about
partnerships
See also
• Business partnering
Retrieved from "http://en.wikipedia.org/w/index.php?title=Partnership&oldid=463624416"
Categories:
• Business law
• Types of business entity
• Partnerships
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