"Let me get back to you after I've spoken with my partner." How often have you heard that regarding a business decision? To what extent do you need to have that discussion?

Partners only exist in the context of a partnership agreement. There are two types of partners - general or limited.

General partners may bind the partnership in regard to any customary and usual business purpose, and act as the agent of the partnership in this respect. The one defense is where a partner was not authorized to act, and the person with whom they dealt was aware of that.

A general partnership agreement only needs to evidence an understanding between two or more persons. It does not have to be in writing. Of course, as a Hollywood producer once put it, "an oral agreement isn't worth the paper it's written on."

Limited partners are not liable for obligations of the partnership unless they participate in the control of the business. Again, this liability is only to those who reasonably believe they dealt with a general partner.

Creation of a limited partnership requires compliance with the formalities in an enabling statute.

Use of a limited partnership is an excellent way to raise capital needed to start your business. All the tax benefits will pass directly to the partners as they have agreed. The limited partners do not participate in the control of the business. Their loss is limited to the agreed upon contribution. While this is similar to the "S" Corporation in several respects, a limited partnership allows greater flexibility in allocating income and deductions among the partners.