What defines a partnership in business terms?

A partnership is defined as a business arrangement where two or more individuals share ownership and the responsibilities of managing a business. This structure allows for the pooling of resources, skills, and expertise, which can foster growth and facilitate decision-making. Partnerships can take various forms, such as general partnerships, where all partners have equal responsibility, or limited partnerships, where at least one partner has limited liability and limited involvement in management.

The essence of a partnership lies in its collaborative nature and shared decision-making, which distinguishes it from other business structures. In contrast to sole proprietorships, which are owned and managed by one individual, partnerships inherently involve multiple stakeholders working together towards a common goal. This cooperative dynamic is vital in defining what a partnership is in business practice.