General Partnership

A General Partnership is the most simplistic type of legal structure designed for the situation in which two or more people are engaging in some type of business activity.

The entities involved in a partnership can be individuals, corporations, or trusts. The profits and losses generated by a General Partnership are shared equally among its partners. Meaning that profits, liability and management duties are divided equally among partners. If you opt for an unequal distribution, the percentages assigned to each partner must be documented in the partnership agreement.  Yet, a partnership agreement is created to further define the rights, responsibilities, and duties of each partner, as well as the terms of continuity if one of the partners resigned or drop from the partnership.  Financial responsibility is shared equally among the partners, with each partner jointly and severally liable for all business debts and obligations which means that the partners are jointly liable for any and all legal claims against any of the partners.

The taxation of a General Partnership is calculated at the individual level. One of the good reason, you may thing of General Partnership is the simplicity of it taxes, as you don’t have to file a separate return; however, partners’ personal assets are unprotected, Partners Liable for Each others’ actions, and finally partnership termination could take place Upon Death or Withdrawal of One of the Partners.