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A partnership

A partnership is like a sole proprietorship in most ways, but it has two or more owners. The partners share the profits and losses of the business according to a prearranged formula. Generally, any partner can obligate the business pay the obligations. A partnership must be dissolved if the ownership changes, as when a partner leaves or dies. If the business is to continue as a partnership after this occurs, a new partnership must be formed.

 

Both the sole proprietorship and the partnership are convenient ways of separating the owners’ commercial activities from their personal activities. Legally, however, there is no economic separation between the owners and the businesses.