The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations.
According to a 2006 article, the first partnership was implemented in 1383 by Francesco di Marco Datini, a merchant of Prato and Florence.
This capacity to join forces in reciprocal services became a distinctive feature, and a long lasting success factor, of the Hanseatic team spirit.
[3] Florentine merchant banks were almost sure to make a positive return on their loans, but this would be before taking into account solvency risks.
[4] After the fall of the Roman Empire, the Levant trade revived from the 10th to 11th century in Byzantine Italy.
The eastern and western Mediterranean formed part of a single commercial civilization in the Middle Ages, and the two regions were economically interdependent through trade (in varying degrees).
The contractual features of a Mongol-ortoq partnership closely resembled that of qirad and commenda arrangements; however, Mongol investors used metal coins, paper money, gold and silver ingots and tradable goods for partnership investments and primarily financed money-lending and trade activities.
[6] Moreover, Mongol elites formed trade partnerships with merchants from Central and Western Asia and Europe, including Marco Polo's family.
[8] In business, two or more companies join forces in a joint venture,[9] a buyer–supplier relationship, a strategic alliance or a consortium to i) work on a project (e.g. industrial or research project) which would be too heavy or too risky for a single entity, ii) join forces to have a stronger position on the market, iii) comply with specific regulation (e.g. in some emerging countries, foreigners can only invest in the form of partnerships with local entrepreneurs).
[12] Partnerships present the involved parties with complex negotiations and special challenges that must be navigated to agreement.
Once an agreement is reached, the partnership is typically enforceable by civil law, especially if well documented.
Partners who wish to make their agreement affirmatively explicit and enforceable typically draw up articles of partnership.
Trust and pragmatism are also essential as it cannot be expected that everything can be written in the initial partnership agreement, therefore quality governance[13] and clear communication are critical success factors in the long run.
In more sophisticated partnerships, different models exist for determining either ownership interest, profit distribution, or both.
Two common alternate approaches to distribution of profit are "lockstep" and "source of origination" compensation (sometimes referred to, more graphically, as "eat what you kill").
[17] Partnerships recognized by a government body may enjoy special benefits from taxation policy.
Among developed countries, for example, business partnerships are often favored over corporations in taxation policy, since dividend taxes only occur on profit before they are distributed to the partners.
In such countries, partnerships are often regulated via antitrust laws, so as to inhibit monopolistic practices and foster free market competition.
Domestic partnerships recognized by governments typically enjoy tax benefits, as well.
[18] The general partnership, in which all partners manage the business and are personally liable for its debts, developed under common law.
[21] A partnership is defined as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
Although the federal government does not have specific statutory law for establishing partnerships, it has an extensive statutory and regulatory scheme for the taxation of partnerships, set forth in the Internal Revenue Code (IRC) and Code of Federal Regulations.
[34][35] However, if this business entity fails to register with the Registrar of Companies, then it becomes a general partnership as a default.