If a business has more than one owner and is not incorporated or organized as an LLC, then it is a partnership; that is, it does not require any paperwork to begin a partnership; it is simply the result of owning a business with another person. A partnership differs from an LLC or corporation in that 1) it does not have formal documents and requirements provided by the government with which it needs to comply and 2) the partners are liable for business debts, unlike the other business structures. 

While many partners have written agreements concerning the operation and management of their business, this is not required by law and in the absence of a specific partnership agreement, the partnership laws of the state are applied. However, because of this, it is prudent to make a partnership agreement, as the laws of the state may not be satisfactory to some or all partners. The creation of such an agreement can be made without the help of an attorney. In this agreement, the partners should include what should be done in the event that one wants to leave, dies, etc. and buy-sell provisions.

There are three basic types of partnerships:

1) General Partnerships:  Two or more people who share all rights and responsibilities with regard to the business. Each partner involved takes on complete responsibility for the debts and obligation of the business. This means that creditors can pursue the partners for the debts of the business; it also means that partners can be liable for any foolish business decisions made by another partner, such as taking out a high interest loan. While this is a considerable degree of personal liability, it is not without advantages. The profits of the partnership are not taxed to the business, but rather, to the partners, who include the gains on their individual returns at a lower rate.

2) Limited Partnerships: In contrast with general partnerships, this enables the partners to lessen their personal liability for the business, to the amount that they invested. Not all partners can do this; at least one must accept general partnership status and consequently, full liability. The general partner, however, maintains control of the business, while the limited partners are not involved in the decisions of management. Both types of partners benefit from the profits of the business. 

3) Limited Liability Partnerships (LLP): While providing the tax advantages of a general partnership, an LLP also provides some personal liability protection to the partners. Partners are not held personally liable for the actions of other partners, or for the debts and obligations of the business. However, because this changes the nature of the partnership, some states subject LLPs to non-partnership tax rules. The IRS, on the other hand, officially recognizes them. This is still different than a Limited Liability Company (LLC).

A partnership is an informal business structure; unlike corporations, they are not required to hold meetings, prepare minutes, have elected officers, or provide stock certificates. It should be noted that the laws governing limited partnerships, especially securities, can be quite complicated. It is advisable to consult with an experienced small business attorney when setting up a limited liability partnership.