Partnership A business owned by two or more people, who agree to share in its profits, is considered a partnership. Like the sole proprietorship, it is easy to start and the red tape involved is usually minimal. The tax structure is the same as proprietorship except in the profits and losses of the partnership are divided by an agreed percentage by the partners. However, for your own protection, it is advisable to have a written partnership agreement that will spell out the specifics of the agreement. Things have a way of changing and people forgetting over time, so it is essential that there be a signed document that all abide by.
Partnerships also have their share of disadvantages.
The unlimited liability that applies to sole proprietorships is even worse for partnerships. As a partner, you are re sponsible not only for your own business debts, but for those of your partners as well. Should they incur debts or legal judgments against the business, you could be held legally responsible for them. Disputes among partners can be a problem, too. Unless you and your partners see eye to eye on how the business should be run and what it should accomplish, you are in for trouble.