Which statement describes a defining characteristic of a partnership?

Which statement describes a defining characteristic of a partnership?

• A. Limited liability of partners.
• B. Carrying on business for profit by two or more persons with no need for a written agreement.
• C. Registration with the state is required.
• D. Partners cannot share profits.

Answer: (B)

A partnership is formed when two or more people carry on a business for profit as co-owners, and it can come into existence without a written agreement. This means you don’t need a formal contract or filing to create a general partnership—the relationship can arise from conduct and an agreement, even if oral. A defining feature is shared profits and losses among the partners, along with joint management, rather than limited liability or mandatory state registration. Why the other statements don’t fit: a general partnership does not provide limited liability to its partners, so that statement is incorrect. General partnerships do not require registration with the state to form, so making registration mandatory is incorrect. And partnerships can and do share profits among partners, so stating that they cannot share profits is false.

A partnership is formed when two or more people carry on a business for profit as co-owners, and it can come into existence without a written agreement. This means you don’t need a formal contract or filing to create a general partnership—the relationship can arise from conduct and an agreement, even if oral. A defining feature is shared profits and losses among the partners, along with joint management, rather than limited liability or mandatory state registration.

Why the other statements don’t fit: a general partnership does not provide limited liability to its partners, so that statement is incorrect. General partnerships do not require registration with the state to form, so making registration mandatory is incorrect. And partnerships can and do share profits among partners, so stating that they cannot share profits is false.