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What is a Partnership?

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If you’re starting a business, there are plenty of options available for the type of entity you want to form, including:

  • Corporation (taxed as an S corp or C corp)
  • Limited Liability Company (taxed as a sole proprietorship, partnership or S corp)
  • Non-profit (known as a non-stock corporation in Virginia or nonprofit corporation in North Carolina); and
  • Partnership (general, limited, limited liability)

This article focuses on the Partnership – a common term used in business, but what many might not understand is a formal legal entity. Under Virginia law, a partnership is created when two or more people agree to carry on a business for profit as co-owners. As opposed to the LLC or Corporation, the partnership entity requires no type of filing or documentation (unless the partners want to create a limited partnership). Thus, if you have ever run a business with a friend and you both split the profits, you just might have entered into a partnership!

Partnerships were extremely popular in early corporate history but have since been mostly phased out by the Corporation and LLC. There are a few distinct characteristics of partnerships that render them less popular.

First, partners in a partnership, generally, share equally in the profits and equally in the losses. Virginia law allows for the partners to create an agreement and change those percentages, but the main point is – partners are personally liable for the partnership’s debts and obligations.

Second, partnerships require unanimous support for major decisions including adding a new partner and other major business decisions. This can of course be changed in an agreement, but these rules are a lot less flexible than other entities.

Partnerships are not the most popular entity out there, but they are still around and important to know about! Our team recommends the LLC or the Corporation for most businesses. We generally recommend that our clients avoid establishing partnerships. The biggest mistake we see people make is accidently establishing a partnership since no formal filing is required. Are you interested in starting up a business? Please reach out to us! Our team provides turn-key solutions to your business through an efficient streamlined process. We have assisted hundreds of businesses with formation. Give us a call today!

Client Reviews

We are proud to have more than 100 five-star reviews across Google, Avvo, and other platforms.
  • Being a first time business owner, you want to make sure you're making all the right decisions. Choosing McCormick Law & Consulting, along with Emma and Taylor, made the process so easy! Emma understood right away what my primary concerns were, and was able to execute everything in a very timely manner! She was extremely easy to talk to and she took the time to explain everything to me, settling my nerves with taking this next big step. Taylor made the process of making it all official completely stress free.
    Crystal G.
  • McCormick Law & Consulting was integral in the creation of our non-profit. We promised our 12 y/o son that we would keep fighting cancer for kids like him but we couldn’t have kept that promise without John McCormick and his team. We were hooked at our first meeting when John simply asked “ Tell me about you son.” McCormick Law and Consulting took care of all the legal work while allowing us to focus on our mission. John and his team continue to be a great resource and supporter of D-Feet Cancer The Dalton Fox Foundation. We couldn’t have asked for better legal representation. Thank you McCormick Law & Consulting.

    William F.
  • I definitely could have created my new business, Davis Wealth Management LLC, but boy that would have been a mistake. Because business formation is not an area in which I practice, I had no idea where my blind spots were, and let me tell you there were plenty. The knowledge I received from the firm is invaluable.

    John McCormick and his firm are very reasonably priced and quickly and efficiently assisted me in creating my new business. It was completely turn key; they did everything for me.  I can't recommend their services enough. Also, huge shoutout to Taylor who kept me informed every step of the way!

    James D.
  • I highly recommendMcCormick Law & Consulting! My Father and I live in two separate states and the properties he needed legal services for are in Virginia. I reach out to Taylor on two separate occasions and she was very responsive and professional. The first time we used their services it went so smoothly that by the time I needed their services again I knew I could just send over the necessary documents, pay my invoice and rest assured it would all get taken care of. They eliminated the stress that comes with handling some else's affairs and I so appreciate that.
    Heather C.
  • From the the very 1st conversation with their office it was clear they would be responsive to all my questions and any support with my business. They are relatable and make their customers feel comfortable with any questions and or concerns that might arise while using their services. I am happy to have found them to support me with my small business needs!
    Lisa N.
  • I can't say enough great things about the professional team at McCormick Law & Consulting! We really had no idea of who to trust and who we could count on for quick and professional service in the Hampton Roads area for getting our new business up and running smoothly and the Team at McCormick Law & Consulting really knocked it out of the park with us!
    Jerry G.
  • I had the good fortune of working with McCormick Law on a business sales contract. I sent them the initial draft provided by the buyer along with a few notes about my specific concerns. They carefully went through the document and provided meaningful additions and corrections that better protected my interests. Thanks to Bobby and John for their personalized attention.
    Arthur B.
  • Mr. McCormick and his entire team were amazing! They assisted me in a legal matter concerning a business dispute. Mr. McCormick is highly experienced, ethical, dedicated, and was prepared to fight my legal matter in court if necessary. I thank the entire team for believing in me and would highly recommend them to anyone!!
    Jeanette L.
  • We used McCormick Law to start up another LLC and it was a great experience. I have used other lawyers and attorneys in the past and I experienced delayed responses and it was what I have come to expect.From the first interactions with Robert and his team, I was surprised to how responsive they were. I even mentioned to my new business partner that this was not normal and I was very happy.Needless to say I will be using McCormick Law for all of my business needs in the future.
    Colton S.
  • I utilized this firm for help on a real estate matter. I felt comfortable with the advice I received and am happy to continue doing business with them and referring others to the practice. Everyone I engaged with was welcoming and made the process very easy.
    Christian S.
  • John and his team were great to work with. They provided advice for starting my business and set everything up in an efficient and timely manner. I will definitely recommend them to others!

    Elizabeth H.
  • I contacted McCormick Law firm to register my moving service in NC. They did an outstanding job. Completed the process way sooner than I expected. Thank you, Taylor.

    Steve T.

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Disclaimer

McCormick Law, PC d/b/a McCormick Law & Consulting and Driving Defense Law is a boutique law firm located in Norfolk, Virginia & Raleigh, North Carolina, that seamlessly serves clients throughout Virginia and North Carolina. Whether you are a new or existing client of the firm, McCormick Law, PC, cannot represent you on any new matter until the firm has made a determination that there is no conflict of interest and that it is willing to accept the new engagement. The testimonials on this website reflect the real-life experiences and opinions of our clients. However, the experiences are personal to those particular clients, and may not necessarily be representative of all clients. We do not claim, and you should not assume, that all clients will have the same experience. Your outcome may vary.

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