Partnership

Accounting Terms Dictionary

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Partnership

A partnership is a legal business entity where two or more individuals or companies come together to run a company.

The partners in a partnership have joint and several unlimited liabilities. If anything goes wrong the partners could lose a lot of money. If one partner decides to buy a Mercedes for the business, both partners are liable to pay for it. If two partners contributed $100,000 each to start the business and one partner was sued, the complainants could take the whole $200,000. Each partner is liable for the other’s mistakes. Partners could also lose their personal assets in a lawsuit, not just the business assets.

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