A general partnership is a joint venture undertaken by two or more people. A partnership may have a very limited purpose, such as a single asset real estate venture, or it may be the foundation of a large business. If you have one or more business partners, and you did not take steps to establish a corporation, limited partnership, limited liability company or limited liability partnership, then your business is by default a general partnership.
General partnerships differ from limited partnerships and from limited liability partnerships. The latter two types of partnerships may be formed by following certain statutes enacted to impart specific characteristics. You cannot accidentally create a limited partnership or limited liability partnership — we will talk about the advantages and disadvantages of those options in later articles.
The law generally considers partners to be equal. Unless you have a written agreement that says otherwise, then a court of law may apportion the assets and liabilities of a general partnership equally among its partners.
Though a partnership agreement is not required, it is advisable to put each partner’s contributions, rights, and responsibilities in writing. An agreement can help partners avoid disputes in the future and, if desired, set forth a method of resolving disputes.
Similar to sole proprietorships, there are advantages and disadvantages in running your business as a general partnership. Some advantages are ease of start up, less paperwork, and fewer legal restrictions.
One disadvantage of running your business as a general partnership is that there is no barrier between you and the business to limit your personal exposure to liability for business debts or other business liabilities.
In many cases, general partnerships will need to register a fictitious name with the Pennsylvania Department of State in order to lawfully do business in Pennsylvania.
If you need guidance selecting the right type of business to file, or any other matter related to managing your business, the attorneys at the Scolieri Law Group, P.C. can help. Located in western Pennsylvania, our attorneys are experienced in Pennsylvania business law and can take care of the details for you, including the formation of a legal business entity if needed. Contact us today at (412)765-0546 or firstname.lastname@example.org.