What is a general partnership?

A general partnership is defined as a formal arrangement where two or more individuals collaborate to manage a business and share its profits and losses. In this structure, all partners are actively involved in the management of the business and are personally liable for its debts and obligations. This means that not only do they share in the gains, but they also bear the risk associated with the business's liabilities.

In contrast to other business forms, such as corporations, which have distinct legal identities separate from their owners, a general partnership allows for a straightforward operational model grounded in mutual agreement among the partners. This cooperative nature fosters collaborative decision-making and enables partners to leverage their individual skills and resources for better operational efficacy. Unlike a solo operation or an organization owned entirely by shareholders, which has defined equity relationships and management structures, a general partnership thrives on the synergy among its partners.