Partnerships are like sole proprietorships except that two or more people are involved. They are easy to create and benefit from the financial and managerial strengths of all the partners.
A general partnership is formed by an agreement entered into by each partner and should include the contributions of each partner, the distribution of profits or losses, and the terms for dissolution. If there is no written agreement, the profits and losses are presumed to be distributed equally. General partners have unlimited personal liability for all the business’s debts and liabilities, and any partner can commit the firm to obligations.
A limited partnership is a partnership having one or more general partners and one or more limited partners. The limited partners have limited exposure to liability and are not involved in the day-to-day management of the limited partnership.
A Limited liability partnership (LLP) and a limited liability limited partnership (LLLP) are both created from existing general or limited partnerships, respectively, that file elections with the Bureau of Corporations and Charitable Organizations of the Pennsylvania Department of State, claiming LLP or LLLP status. Limited liability partnership/limited liability limited partnership status provides the general partners with limitations and additional protection on their personal liabilities as general partners.