General Partnership is the most basic form of partnership. It is comparable to a sole proprietorship…but with at least TWO owners and/or partners.
Although a written agreement is NOT required to form a general partnership, it is strongly recommended that a WRITTEN agreement be drafted by an attorney and executed by all of the partners.
Profits and Losses
The profits, and LOSSES of a partnership are shared equally amongst the owners based on their share of ownership. A written partnership agreement, however, can modify this default allocation of profits and losses.
No Asset Protection and High Exposure to Personal Liability
Each General Partner is considered an “Agent” of the partnership. Thus, he or she can legally bind the entire partnership and thus its individual owners; All general partners, thus, may be held PERSONALLY liable for this one partner’s acts and dealings with third parties.
Some asset protection and shielding from personal liability may occur in one of the following business structures that are similar to partnerships: