This means you own the unincorporated business alone. You are:

• Entitled to all profits.
• Personally responsible for the business’s debts, losses, and liabilities, including taxes.

This occurs when two or more persons enter into a relationship to carry on a trade or business. Each partner:

• Owns a share in the ownership of the business, contributing in all aspects of the business, including money, property, labor, and skill.
• Shares in the business’s profits, losses, and liabilities, including taxes.

The three general types of partnerships are:

• General Partnership: Partners equally divide everything (profits, liability, and management duties). For unequal distribution, the percentage assigned to each partner must be documented in a partnership agreement.
• Limited Partnership: Partners have limited liability in exchange for limited management decision-making powers. The limitations depend on your investment or ownership percentage.
• Joint Ventures: This is like a temporary general partnership. The relationship is limited in time or for a single project.

• C Corporation: A legally independent entity that is owned by shareholders. The corporation, not the shareholders, is legally liable for the corporation’s actions and debts. Due to the tax and legal complexities and the costly administrative fees, our Boston business contracts lawyer recommends establishing a corporation for larger businesses with multiple employees.
• S Corporation: A special type of corporation created through an IRS tax election and avoids double taxation (tax on the corporation and shareholder). Unlike C a corporation, the profits and losses pass through your personal tax return, and the business is not taxed.

A hybrid, the LLC provides a corporation’s limited liability features and the partnership’s tax efficiencies and operational flexibilities. Depending on the state of incorporation, the LLC’s owners, or “members,” may consist of one person or two or more people, corporations, or other LLCs. All profits and losses “pass-through” the business to each member. Members report profits and losses on their personal federal tax returns, just like in a partnership.