Generally, there are four principal forms of business organization. Under this form of organization, an individual is the sole-owner of a business, receiving all profits and absorbing all losses. This is the easiest kind of business to form, because it needs no government approval. Profits are taxed as personal income and the owner is personally liable for all debts and taxes. Partnership General Partnership A General Partnership is a flexible and simple structure allowing the association of two or more people who share in the profits and liabilities of a business.
Partners are personally liable for debts and taxes, and are taxed separately.
A partnership is usually formed by signing a partnership agreement. Though an oral agreement could serve the same purpose, a written agreement is preferable. Limited Partnership A Limited Partnership allows partners to limit their liability to the amount of their investment. Certain requirements specified in the Uniform Limited Partnership Act and the laws of the State of Rhode Island must be met to establish this form of business. A written partnership agreement is necessary and must be filed with the Rhode Island Secretary of State .