A co-partner is an investor in a partnership. According to Section 202 of the “UPA” or Uniform Partnership Act, a person who receives a share of the profits of a business is generally presumed to be a partner in the business. When two or more persons carry on their own property into an association, this co-own, for-profit business will become a partnership. The “person” could be an individual, business corporation, nonprofit corporation, etc. The “business” includes every trade, occupation, and profession, according to UPA article 1 section 101.
Co-partners play different roles in a limited liability company (LLC) or limited liability partnership (LLP). An LLC gives stronger liability protection to the co-partner, yet an LLP requires the co-partner to take personal responsibilities to debts of the business except for other co-partners’ negligence. The general partner will take full liability to the business. Both the LLC or LLP co-partner could select a tax deduction up to 20% of the income according to the Tax Cuts and Jobs Act (“TCJA”) and IRS code Sec.199 A. However, the co-partner of LLP could only file the business as a partnership, the co-partner of LLC could select to be taxed as a partnership or corporation.
[Last updated in February of 2022 by the Wex Definitions Team]
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