Is it a good idea to do the Partnership/Co-Owner?
No-one can really answer that. Its up to you to decide, but keep in mind that friendship and business partnership frequently become mutually exclusive.
We don't have any terms and not sure if we'll have one.
This is a very bad idea. Make an agreement on terms, put it in writing, have an attorney (for each side) to go through it, and you'll save a lot of grief to both of you later.
My issue is, what if things don't work out and we plan on splitting up
in the future?
This is exactly why you have to have a written agreement, that would cover this area in particular.
Or would it be better if we register our own business entity...?
Totally unrelated to anything you wrote up until this question.
a Unicorporated Business Organization, is this the Sole Proprietary
No, its unincorporated business. In the US, incorporated business is a Corporation. Unincorporated business is a sole-proprietorship for an individual, a partnership for a group of individuals (or entities) or a LLC for either. Partnerships may be general, limited, limited liability or limited limited liability. Depending on state laws, you should chose which kind of entity is the most suitable. In other countries the incorporation rules may be different, check your local laws. Generally it is best to write your country of residence in the question or add a location tag.
Would it be possible if my partner do the same, register their own
reseller's permit and business entity as a Unincorporated Business
Then you would not be partners, but two separate and unrelated businesses. If you're related - you're partners and should have a partnership agreement/corporate charter/LLC operating agreement - depending on what business entity you chose.
- Decide whether you want to partner with your friend. Assuming that you do....
- Agree on all the terms and conditions (workload split, equity split, earnings split, losses split, responsibilities split, dissolution terms, etc).
- Have it all in writing, signed by both.
- Form a business entity.
- Apply for all the relevant licenses and permits.
- Start earning money.
- Become a billionaire.
Not executing properly any one of the steps might lead to failure.