Partnerships Vs. Subcontractors

A partnership is a specific form of a business association, while a subcontractor is an entity that enters into a specific kind of contractual relationship with another entity. Partnerships can work as subcontractors, and subcontractors can be entities other than partnerships. The laws governing partnerships and subcontractors differ between states, so consult an attorney in your area if you need legal advice or assistance.

Partnership

A partnership is a business association into which two or more people enter for the purposes of making a profit. A partnership is the default business association whenever two or more people go into business together. It offers its members, known as partners, no liability protection from the partnership's liabilities, but it is also very easy to create. Partnerships are governed by state laws, and some states allow for other kinds of partnerships, such as limited partnerships, though these require state registration to create.

Subcontractor

A subcontractor is typically a person or business that agrees to perform certain activities for another contractor, known as a general contractor. Typically, general contractors hire subcontractors in construction or building projects or in other projects that require numerous types of workers with specialized knowledge. When a general contractor hires a subcontractor, the two enter into a contractual agreement that details the requirements of the job. This contractual relationship does not necessarily create a partnership, and the two entities do not become a new partnership by entering into a contractual relationship.

Partner and Subcontractor

A general contractor can hire anyone to subcontract a portion of the job, including partnerships. For example, if a property owner hires a contractor to construct a building, the general contractor can hire a plumbing company to handle the plumbing needs of the project. If the plumbing subcontractor is itself organized as a partnership, this doesn't affect the general contractor/subcontractor relationship between the two entities.

Does a Partnership Exist?

Some people use the word "partnership" colloquially, and the mere use of the word does not necessarily imply that a legal partnership exists. For example, a general contractor may refer to subcontractors as partners in a project, but that doesn't mean the subcontractors and the general contractors are members of a legal partnership. The contractor/subcontractor relationship is typically governed by the terms of the contractual agreement into which the parties entered, and simply referring to that relationship as a partnership doesn't mean that a legal partnership exists.

References

About the Author

Roger Thorne is an attorney who began freelance writing in 2003. He has written for publications ranging from "MotorHome" magazine to "Cruising World." Thorne specializes in writing for law firms, Web sites, and professionals. He has a Juris Doctor from the University of Kansas.