This article summarizes the types of partnerships that exist.

Active Partner: An active partner is also referred to as a working partner. An active partner performs a direct role in the management and running of the business. They also invest in the partnership business.

Sleeping Partner: A sleeping partner is a partner who:

  • Invests in the business
  • Shares the gains and losses of the business
  • Does not participate in the conduct and management of the business
  • Is known to the public as a partner
  • Is liable to the firm’s creditors

Silent Partner: A silent partner is a partner who:

  • Is known to the public as a partner
  • Does not participate in the management and conduct of the business
  • Is liable to the firm’s creditors as other partners

Secret Partner: A secret partner is a partner who:

  • Takes an active part in the conduct and management of the business
  • Is not known to the public as a partner
  • Is liable to creditors like other partners
  • Need not serve notice to creditors regarding their retirement from the business

Nominal Partner: A nominal partner is a partner who:

  • Does not contribute toward capital
  • Does not share the gains of the business
  • Is publicly known as a partner (in fact, a nominal partner has allowed other partners to use their name as partner only to oblige)

Minor Partner: A minor partner is a partner who:

  • Cannot themselves be a partner because they cannot contract
  • Can share in the gains of the business with the consent of all partners
  • Has another person to act as their guardian
  • Does not bear the losses of the firm out of their private property

Frequently Asked Questions

What are the different types of partnership?

There are six types of partnership: - Active Partner - Sleeping Partner - Silent Partner - Secret Partner - Nominal Partner - Minor Partner

What is an active partner?

An active partner is also referred to as a working partner. An active partner performs a direct role in the management and running of the business. They also invest in the Partnership business.

What is a silent partner?

A silent partner is a partner who: - Shares the gains and losses of the business but does not participate in the conduct and management of the business - Is known to the public as a partner - Is liable to creditors like other partners

What is a secret partner?

A secret partner is a partner who: - Takes an active part in the conduct and management of the business - Is not known to the public as a partner - Is liable to creditors like other partners

What is a minor partner?

A minor partner is a partner who: - Cannot themselves be a partner because they cannot contract - Can share in the gains of the business with the consent of all partners - Has another person to act as their guardian - Does not bear the losses of the firm out of their private property

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

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