A business partnership is a legal arrangement in which two or more people own a business together, with each sharing the duties and financial outcomes of said business. The three types of business partnerships are general partnerships, limited partnerships and joint ventures, as listed by the U.S. Small Business Administration.
A general partnership gives each partner equal responsibilities and equal share in the business's profits and losses. A limited partnership dictates what percentage of the business each partner owns; thus, each person is liable for a specific portion of the duties and returns. A joint venture is a general partnership that is only in effect for a specified time period.
As with sole proprietorships, partnerships are subject to taxes at the local, state and federal level. All partners in a business must claim their portion of the business's profits or losses on their individual tax returns. In addition, the partnership must file an annual return summarizing its gains, losses and deductions. Partnerships must also obtain state business licenses and any applicable local permits.
Though multi-owner businesses are not required to have a legal partnership agreement, it is strongly recommended so that business partners can avoid disputes and clarify business procedures.