General partnership

PrepNuggets

A general partnership is a type of business structure where two or more individuals own and operate the business together. The partners are personally responsible for all debts and obligations incurred by the business.

One of the main advantages of a general partnership is that it is relatively easy and inexpensive to set up and operate. Partners can pool their resources and expertise to grow the business, and they have the flexibility to make decisions and divide profits as they see fit.

However, there are also some significant disadvantages to a general partnership. Like sole proprietorships, general partnerships have unlimited liability, which means that the partners are personally responsible for all debts and obligations of the business. This means that the partners’ personal assets, such as their homes and savings, are at risk if the business fails or is sued.

General partnerships are typically suitable for small businesses with a few owners who are willing to take on the risk of being personally responsible for the business’s debts and obligations. Examples of general partnerships include small law firms, accounting practices, and construction companies.

See also: Sole Proprietorship, Limited Partnership, Corporation

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