To help keep the words straight, think of partnering as something you do -- an action. A partnership is a structure or agreement. A successful partnership requires good partnering. For a small business, your business may be an official partnership and your success may depend on the partnering contributions from both within and outside the company.
Partnering happens when two or more groups or individuals work together to accomplish a project or reach a goal. The focus of partnering is to bring different skills from the different parties to more effectively accomplish the task. Partnering can be as simple as two coworkers combining their separate talents to work on a project. Partnering may also be set up as a formal agreement that outlines what each party is responsible for, or it may be the result of people getting together to help each other out.
For a small business, other types of partnering, in additional to any partner-owners, can be of benefit and increase sales and profits. Your business may have partnering relationships with your suppliers or your customers. A supplier provides wholesale products but may also include marketing help and training as it works with your business so both companies prosper from increased sales. As a small business, you may be partnering with other businesses with different products or services, so the combination of companies can provide solutions for your combined customers.
A partnership is an official type of company structure. It is registered with the state, uses its own federal tax forms and has a formal partnership agreement. The partnership agreement provides the details of how the partners in a business will divide up the partnering duties and the rewards of owning a company. While the limited liability company is an alternative form of formal business structure, an LLC also functions as a partnership, with a formal agreement very similar to a partnership agreement that lists the rights and responsibilities of each of the owners.
Your small business may also develop formal or informal partnerships with other individuals or companies. If you are partnering with other companies, you have formed some sort of partnership. Written partnership (not the partnership as a business type) agreements can help define how a partnership will function and which partnering services or activities are the responsibility to each participant in the agreement.