The term "partner" is used in many different contexts outside of the world of business. Two people who choose to live together in marriage or as a committed couple may call each other their partners, and good friends who have a close emotional bond may refer to each other as their "partners-in-crime." In the business world, though, a partnership has a distinct meaning and Chicago business owners should understand it before they commit to being partners with others.
A business partnership is defined by having a business with more than one involved party. Partnerships have at least two entities involved and can be structured so that those entities share the profits of the business. There are not many formal requirements to creating partnerships, but individuals should know what liability they take on when they enter into partnership agreements.
As is the case for individuals who create sole proprietorships, partnership owners are personally liable for any losses their businesses take on. This means that if a partnership goes into debt, the owners of the partnership will have to personally pay off those debts if the business cannot. Put simply, any loans that a partnership acquires will become the personal liability of the owners.
Partnerships are fairly straightforward to structure but can be complex when it comes to management, responsibilities and liabilities. Before entering into a partnership agreement, a Chicago resident should get the legal advice that they need to make an informed business decision. Independent counsel should be sought from knowledgeable legal professionals as this post, though informative, does not provide its readers with any legal advice.