Business Entities – Partnerships and Similar Terms

In the current American legal system, “Business” is usually defined as a corporation, partnership, association, trust, sole proprietorship, or some other entity designed to carry on a transaction. Business is the activity of delivering goods or services to an end-user in exchange for a profit. The word “commerce” is often used interchangeably with business, but there are important differences. The word is also used to describe an intermediary relationship designed to carry on another party’s transactions. Thus, the terms are synonymous. “Commerce” and “Business” are not mutually exclusive; a business can be organized and operated as a corporation, or sole proprietorship, for example, and still engage in business.

BUSINESS

A partnership is formed by more than one individual. Partnerships are generally created through a Power of Attorney that authorizes one person to act as the agent for another. In a limited liability partnership (LLP), there is no limit on who can act as the agent, so partners can engage in all of the conductive business of their partnership. Partnerships are considered to be a form of organized business when one or more members control or own a substantial portion of the partnership’s assets, and are allowed to participate in the management and conduct of the partnership’s business. There are many ways to form a partnership, including common law partnerships and modern joint ventures.

To protect its interests, businesses have been successful in lawmaking through incorporation. Incorporation is accomplished by filing Articles of Organization with the appropriate county or state in which the business is registered. Business owners must choose whether to use an “irmament” or a “sole proprietorship” as their business entity, and select the corporate and business license type that best meets their needs. With an LLC, there are few restrictions on who can share in the profits and losses, making it a popular choice for new businesses.