Future Business Leaders of America (FBLA) Agribusiness Practice Test

What are the different types of partnerships?

1. General and Corporation

2. General, Limited, and Limited Liability

3. Sole Proprietorship and Family

4. Partnership and Joint Venture

The correct answer is: General, Limited, and Limited Liability

The different types of partnerships primarily include General, Limited, and Limited Liability partnerships. In a General Partnership, all partners share equal responsibility for managing the business and are jointly liable for its debts. This form of partnership does not require a formal agreement, although having one is advisable to outline the roles and responsibilities of each partner. Limited Partnerships involve at least one general partner who manages the business and is personally liable for its debts, while the other partners, known as limited partners, contribute capital and have limited liability based on their investment. Limited partners typically do not participate in the day-to-day management of the business. Limited Liability Partnerships (LLPs) provide a combination of the benefits of general and limited partnerships. In an LLP, partners have limited personal liability for the debts of the partnership, protecting their personal assets from business liabilities, while still allowing them to take part in the management of the business. This classification of partnerships is essential for understanding how different structures function legally and economically, impacting liability, management roles, and tax responsibilities.