The functioning of partnerships is codified under Commercial Code.

The second type of company is the capital company, known in U.S. as one of private business corporations and it is reviewed under next category.

The basic difference between these two types of companies foreseen by the Code involves the dominant position of partners in partnerships, and the dominant position of capital in capital companies, inclining legislators to award legal personality to the company. The most attractive feature of partnerships is the way they are taxed. the partners from the partnership are taxpayers themselves, who submit claims based on regulations regarding personal income tax. This means that the problem of dividends does not appear in this type of company.

Polish commercial law distinguishes four types of partnerships:

• a general partnership
• a limited liability partnership(LLP)
• a limited partnership
• a limited partnership with shares

Partnerships are intended to create organizational structures which enable the efficient conduct of business. A fundamental problem which this type of organization helps to solve is the need for having partners. If a company becomes too large to operate as a sole proprietorship, or if in order to begin operations the cooperation of at least two persons is required, then entering into partnership becomes essential.

In the vast majority of cases, the formation of a capital company, either as a limited company or a PLC, is not necessary, as these forms are desirable only for extremely large projects. It is advisable to go into a partnership, which is much cheaper and easier to manage. The order presented above of: general partnership, limited liability partnership, limited partnership, and limited partnership with shares, reflects the order in which these forms are presented in the Code, and is related to the level of complexity of the different types of company. As the number of partners and the level of complexity of operations increase, so the more advanced forms of organization become more desirable.

A general partnership is the most basic form of partnership available under Polish law. It must be clearly differentiated from a civil partnership which is regulated by the provisions of the Civil Code, whereas a general partnership is provided by the Commercial Code. The general partnership is appropriate for every kind of operation carried out on a modest scale, in which at least two people will cooperate. The functioning of general partnership in Poland resembles its equivalent in other systems of law (for example in U.S.).

A limited liability partnership (LLP) is one which was especially created for the liberal professions. There are subjective limitations on the kinds of operations that LLP can carry out. This type of partnership combines the simplicity of a general partnership with regulations appropriate for the conduct of specific liberal professions. This form reflects the specifics of liability inherent in a given profession, and the requirement for due diligence of each of the partners as regards relations with clients. This type of partnership is most often set up by doctors, architects, accountants, and lawyers.

A limited partnership allows quite large projects to be carried out. It features certain characteristics which facilitate raising capital, and combining in a single organizational structure individuals who possess knowledge, skills, or qualifications(know-how) with individuals who possess capital. It is a legal form which allows some of the partners not to be involved in the daily operations of the partnership. It is also possible to restrict the responsibility of some of the partners for the partnership’s liabilities.

A limited partnership with shares offers a real alternative to a limited company. In organizational terms, it is capable of implementing large projects, and compares favorably to a limited company in terms of taxation and costs of operation. A limited partnership with shares is able to raise capital and set up supervisory bodies. It has two types of stakeholders, general partners and shareholders, the latter of whichare not liable for the company’s debts.