When starting a business, forming a partnership can be a great way to share the responsibilities and risks with another person or entity. However, before diving into the partnership, it is important to understand the type of agreement used to form a partnership business.

There are two common types of partnership agreements: general partnerships and limited partnerships. General partnerships are the most common type of partnership agreement where all partners are equally responsible for the business`s debts, profits, and losses. This means that each partner is liable for the actions of the other partners, and any debts incurred by the business will be equally shared among all the partners.

On the other hand, a limited partnership agreement is a partnership where there are two different types of partners: general partners and limited partners. The general partners are responsible for managing the business and are personally liable for its debts, profits, and losses, just like in a general partnership. However, limited partners are only liable for the amount they invest in the business and do not participate in the management of the business.

When forming a partnership agreement, it is important to consider the following elements:

1. Name of the partnership: The name of the partnership must be unique and should not already be registered by another business.

2. Contributions from partners: Each partner must agree on the contribution they will make towards the business, which can be in the form of cash, property, or services.

3. Division of profits and losses: Partners must agree on how profits and losses will be shared among them.

4. Roles and responsibilities: Partners must agree on their roles and responsibilities in the business.

5. Decision-making: Partners must agree on how decisions will be made in the business.

6. Duration of the partnership: The partnership may be set up for a certain period of time or indefinitely.

7. Dissolution: The partners must agree on how the partnership will be dissolved if necessary.

In conclusion, forming a partnership agreement is an important step in starting a new business. The partnership agreement should be clear, comprehensive, and address all aspects of the business, including the roles and responsibilities of each partner, decision-making processes, and division of profits and losses. By understanding the types of partnership agreements and their components, business owners can make informed decisions that will help ensure the success of their partnership.