Which statement describes a Partnership?

• A. Two or more people doing business documented with Partnership Agreement
• B. A stand-alone business taxed as a corporation
• C. No agreement needed to form
• D. Partners are not liable

Answer: (A)

A Partnership is defined by two or more people who run a business together under an agreement that lays out ownership, responsibilities, and how profits and losses are shared. The statement describing two or more people doing business documented with a Partnership Agreement best captures that structure, since it shows both multiple owners and a formal plan for how the business operates.

A stand-alone business taxed as a corporation describes a corporation, not a partnership, which has different ownership and tax rules. The idea that no agreement is needed to form a partnership is incorrect because, in practice, partnerships rely on an understanding among owners about rights and duties, even if it’s informal. Finally, the notion that partners are not liable misstates typical partnership liability, especially for general partnerships where partners usually face personal liability for the business’s debts.