General Partnership

According to civil law a partnership is a contract between persons who agree to cooperate and carry on a business, contribute to it by combining knowledge, property, and effort and to share in its profits. It is created with two or more persons and needs only a verbal agreement or handshake. A partnership agreement should always be created. In some instances these agreements may be registered and available for public inspection.

All partners share income and losses in the general partnership and are given certain tax benefits. The main disadvantage is probably that the partnership has a strict liability to third parties injured by the partnership. All partners are jointly liable for the debts and or judgments of the partnership. If one of the partners commits to a business venture in the name of the company each partner could be personally liable for the business’ obligation resulting in huge personal financial risk.