A general partnership is a legal arrangement between two or more people, by which they agree to share certain aspects of a jointly-owned commercial enterprise, including assets, liabilities and profits. Unlike a limited partnership, where some of the partners have limited liability and/or rights, a general partnership involves unlimited liability of all partners. In addition, the partners are typically “jointly and severally liable,” such that one partner may be legally responsible for all debts of the partnership. There is generally no legal requirement that the parties have a partnership agreement, but entering into one is highly recommended.
A general partnership can be attractive for many reasons:
Without a doubt, the single biggest drawback of a general partnership is the unlimited personal liability of each partner. Partnerships can also face stability issues, as the departure of a partner can effectively terminate the partnership. Furthermore, a general partnership does not provide any protection for a partner’s personal assets from creditors of the business.
At the office of Howard N. Sobel, we provide comprehensive legal counsel to businesses and business owners. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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