Any individual may set up a business alone by obtaining a license to do business form the county in which he or she intends to set up the business. This form of business is called a proprietorship. Unlike corporations and limited liability proprietorships no other permission or formality is required and the state corporate division is not involved. Proprietorships are not separate legal entities and are usually found in small retail shops and in service enterprises like consulting firms and insurance agencies. In number, proprietorships are the most common form of enterprise in the United States. They are insignificant, however in terms of the revenue they generate.
Partnerships, like corporations (and unlike proprietorships) have separate legal entities. A not-U.S. corporation or individual can form a partnership with an individual, a corporation or another partnership doing business in the United States and vice versa. For a partnership to exist there is no requirement that there be a written partnership agreement. Normally, however, a written partnership agreement should be entered into. A partnerships can arise simply out of the acts of the partners particularly if the hold themselves as partners to the general public. In situations where there is no partnership agreement the relationship between the parties is determined by the terms of the Uniform Partnership Act (“UPA”) which has been adopted by all the states. The UPA sets out the rules for determining whether or not a partnership exist. For example ,the receipt by a person of a share of profits of a business is a prima facie evidence that the recipient of the profits is a partner in the business.(Unless, of course there is another good reason for doing so ,i.e., salary.) However, the fact that two or more persons own property in common does not itself create a partnership between co-owners.
There are two types of partnership: general partnerships and limited partnership.
1General Partnerships
When two or more individuals set up a business enterprise as co-owners of the enterprise an do not organize themselves as a corporation they have formed a “partnership” .There are no formal requirements for the formation of a partnership and businessmen may be “partners” in the eye of the law without knowing it. Unless there is a partnership agreement which spells out the terms of the partnership, partners share equally in the assets and liabilities of the partnership upon the dissolution of the partnership.