Some forms of business are well known: corporations and limited liability companies being the most prominent. What's not as well recognized as a form of business is a partnership. It's almost the most precarious because it can be created without the owners knowing it. So, what is a partnership?
In Minnesota, partnerships are governed by the Minnesota Uniform Partnership Act of 1994. See Minn. Stat. §§ 323A.0101-.1203 (2018). A partnership is defined as “an association of two or more persons to carry on as co-owners a business for profit.” Such an association may exist “whether or not the persons intend to form a partnership.” “A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment . . . for services as an independent contractor or of wages or other compensation to an employee.”
You do not need a writing to have a formed partnership. An oral agreement generally is “sufficient to establish a partnership relationship.” Maras v. Stilinovich, 268 N.W.2d 541, 544 (Minn. 1978). In fact, the term “partnership agreement” is defined in the Uniform Partnership Act to mean “the agreement, whether written, oral, or implied, among the partners concerning the partnership.”
The most prominent elements of the above is the method for calculating compensation. If you have someone in Lino Lakes you consider to be an employee, but from your Hugo office you send them profits from the business, you're most likely looking at an owner. That would be true even if that Lino Lakes resident is being paid a salary or at an hourly rate.
