A general partnership is a relationship between two or more persons to conduct a trade or business with a for-profit motive. Partners form a partnership to operate a business, sharing the company’s profits, losses, liabilities, and assets.
In the United States, two or more persons can form a general partnership by agreement, written or oral, and does not require a formal filing with the Secretary of State. A general partnership may file a Statement of Partnership Existence with Delaware, but it is not required.
Business partners generally avoid the general partnership structure because the owners have unlimited personal liability for partnership debts. For example, if a general partnership is sued and the plaintiff obtains a judgment, the plaintiff can recover assets of the general partnership, and pursue the personal assets of the general partners.
Some of the safer entity alternatives are the corporation, the limited liability company (LLC), limited partnership (LP), or limited liability partnership (LLP).