A Partnership is formed automatically when two or more people are in business together for profit. This type of entity is also formed automatically. No formal documentation is required either between the partners or to be filed with the state. However, it is a good idea, for both business and legal reasons, to have a Partnership Agreement that addresses how certain decisions will be made, how profits will be allocated, any special risk allocations and any other considerations that may affect how the business is managed. In a Partnership, the partners decide how to manage their business and they share equally in risk and liability, unless they agree otherwise. Although liability and risk are shared among the partners, they are each personally liable for all Partnership obligations and debt. This means that each partner is liable for the business acts of the other partners. Partners’ incomes are taxed as personal income; there is no additional tax on business profits.