Frequently Asked Questions

How does the law separate individual owners and their assets in a partnership business?

In a partnership business, the law distinctly separates the individual owners and their assets from the business. This is a key difference from a sole proprietorship, where the owner is directly liable for any injuries, wrongdoings, loans, and debts of the business, and personal assets can be directly acquired to pay back debts. In a partnership, two or more people own, run, and finance the business operation. There are different types of partnerships, including general partnerships, family partnerships, limited partnerships, and incorporated limited partnerships. In a general partnership, all partners are equally responsible for all aspects of the business and are equally liable under the law when it comes to debts. Family partnerships are general partnerships started with two or more members of the same family. Limited partnerships have a single person in charge of the business, with other partners offering financial support and limited say in operations. The liability of the partner providing financial backing in a limited partnership is directly proportional to the funds provided to the business. This means that the individuals who provide the most money will be liable in cases where the partnership dissolves and debts need to be repaid.