When it comes to forming a business partnership, you can either set up a general or a limited one.
A general partnership is incorporated by two of more individuals looking to jointly own a for-profit business. Partners in a operation such as this agree to share their assets, whether it be skills or monetary ones.
The general partnership business structure allows one of the entity's partners to enter into a binding third party contract without getting prior authorization of his or her co-owner. While it can be written into the partnership agreement that this not allowed, it's something that can be done unless it explicitly states otherwise. It also allows for one of the partnership's owners to be held liable for another partner's debts.
When it comes to a limited partnership, it too involves two or more individuals committing themselves to jointly work to run a for-profit business.
It differs, however, from a general type of partnership in that one or two of the partners are tapped to take on more of a leadership role in the organization. Those leaders are the ones who are responsible for everyday management of the partnership, as well as entering into contracts and taking on debt.
A limited partnership allows the remaining partners in the business to take on more of what's akin to a shareholder role in their company. Liability within a limited partnership is relative to the investment amount each partner has made. Those with the smallest interest in the partnership have little to no managerial control over it.
Those who ultimately decide to take part in a limited partnership agreement do so for the same reason people set up general ones; to share skills and assets.
Many individuals also find themselves motivated to join limited partnerships because of their ability to profit off the entity's successes while not having to run it nor having to be responsible for its debts.
Those with a vision for the company's success are motivated to join a partnership as a general partner in order to be able to enter into contracts necessary to drive the partnership's growth.
If you're considering setting up a partnership, then a Cincinnati business formation attorney can advise you of more pros and cons of doing so.
Source: Ohio Secretary of State, "Starting a partnership in Ohio," Jon Husted, accessed March 09, 2018