A business in which there are two or more owners is known as a partnership. Unlike other business arrangements, there are many distinct types of partnerships one can form. A partnership agreement generally specifies the connection between the partners, the kind of business, and the responsibilities of each person. In a partnership, there are four basic types of partners to consider:
Management Partner: This is one of the types of general partnerships in which a managing partner is a single person or entity. The managing partner must be actively involved in every aspect of the organization. If a person acts to be another person, it is known as an ostensible companion.
Nominal Partner: Those who do not possess a significant partnership is referred to as minor partners. They are merely bringing their image to the partnership deal, for example. The partner is not needed to contribute cash to the company and is not subject to profit-sharing in these types of partnerships.
Silent Partner: A partner who is not interested in the company’s day-to-day activities is called a sleeping partner. These are partners who only supply funds to a firm but do not have control over it. In the partnership form of the business, the actions of other partners usually bind inactive or sleeping participants.
Partner by Estoppel: A partner by estoppel occurs when one partner declares that he wishes to partner in the company. Such partners will be unable to deny that they were business partners in the future. These individuals are not true partners in partnership businesses but have fooled themselves into believing they are.
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