A business owned by two or more persons who share its profits and losses is a partnership.
A partnership is formed when people join together to carry on a business for profit, typically contributing money, property, labor, or skill. The partners share the venture’s economic results under their agreement or the default rules of applicable law. In many legal systems, a partnership can arise from conduct even without a formal written document.
The ordinary general partnership differs from a corporation or limited liability company because general partners commonly participate in management and may be personally liable for business debts. Limited partnerships and limited-liability partnerships modify that exposure, but they remain partnership forms rather than corporations. A sole proprietorship has only one owner.
Partnerships also commonly receive pass-through tax treatment: the business reports its income, deductions, gains, and losses, while the partners report their shares. The exact rules vary by country and state. In the United Kingdom, the Partnership Act 1890 is a foundational statute; in the United States, the Revised Uniform Partnership Act was promulgated in 1997.