partnership

   An ongoing business enterprise entered into for profit that is owned by more than one person, each of whom is a partner. A partnership can be created by a formal written agreement (the best idea) or based on an oral agreement or a handshake. Each partner contributes money, property or labor in return for a percentage of ownership and is personally liable for all the debts and contracts of the partnership, even when another partner creates the debt or enters into the contract. Each partner has a share in management decisions and shares in profits and losses according to the percentage of his or her total ownership. A partner cannot take for himself or herself a corporate opportunity that by rights belongs to the partnership. Registration with a governmental agency is not necessary to create a partnership, although tax registration and other requirements of conducting a business (e.g., filing a doing business as statement) may still apply. Partnerships do not pay federal or state income taxes; rather, profits and losses are passed through to the individual partners, who report the information on their personal returns. A partnership differs from a joint venture, which is an enterprise formed for a particular project, with the aim of a prompt division of profits. See general partner; limited liability partnership; limited partnership; silent partner.