Difference between Partnerships and Limited Partnership

Partnerships
If you're starting your company with someone else, a partnership may be the best choice. A partnership provides many benefits - you can combine resources and experience with another, secure private funding, and more. Just keep in mind that in partnership responsibilities and liability are split equally between each member. Nevertheless, certain types of partnerships will allow you to set the roles, responsibilities, and liability of each member.
A partnership does require that you register your business with your country and establish an official business name. After that, you'll be asked to get a business license, along with any other documentation that your country office can help you with. You'll also require to register your company with the IRS for tax purposes. Although this may seem like a complex process, there are lots of advantages to a partnership, so if you're looking to have a co-owner, don't be scared to go and try it - many online businesses are established using partnerships. Having someone to assist share the work of starting a new business is clearly worth the additional paperwork.

Limited Partnership
A limited partnership, or LP, is an off-shoot variant of a common partnership. While it may not be as common, it's a great bet for companies who are seeing to raise money from investors who aren't involved in working the day-to-day aspects of your operations. With a limited partnership, there are two positions of partners which are The General Partner and the Limited Partner. The general partner is usually included in daily business decisions and has individual liability for the company. There's also a limited partner who is not liable for debts and doesn't participate in regular business management of the company. Just like a common partnership, if you enter a limited partnership deal, you'll need to register your company with the state, found a business name, and tell the IRS of your new business.

Decisions when choosing a business type

Debt and Liability
Most of the small businesses and startups accept the personal liability associated with a sole proprietorship or partnership as a significant risk of doing business. If you're in a high-risk industry, such as selling CBD or firearms online, or simply want to keep your business and personal circumstances private, you can limit personal liability by filing for a more formal company structure. The downside is that this commonly takes more paperwork, costs more to register, and may have greater reporting or maintenance demands than simpler business models.

Filing taxes
You have two choices when it gets to filing your business taxes. You can record business profits/expenses on your tax returns, or you can hold your business file taxes separately as its entity. Most of the small business owners prefer the simplicity of filing taxes on their returns, but filing business taxes separately can help you keep your private and company finances separate.

Partners or Investors
If you're starting your business with a partner or private investor, you won't be able to create a sole proprietorship. You can pick between a partnership, a limited partnership, or an LLC.

Hiring employees
Some of the easiest business types like sole proprietorships can make it hard to hire workers down the road. While it's likely to change your business type to grow with your company, if you already have workers or plan to hire them, it may be better to future-proof by a more formal business structure like an LLC or corporation.

Are you beginning your company for-profit or non-profit cause? If you're just concerned with helping others and aren't going for profit, establishing a nonprofit can grant you tax-exempt status—although there's a lot of paperwork needed.

Will your business be held and operated democratically by its members with no particular owner? Known as a "Co-op", this type of company is very rare.