General partnerships are a simple business structure that allows two or more people to operate a company together. General partnerships are similar in many ways to sole proprietorships and have many of the same advantages and disadvantages as sole proprietorships do. Before operating a company as a general partnership, it is essential to have an understanding of the implications that this business form could have on your personal financial situation.
Sepahi Law Group APC has extensive experience advising clients in San Diego and throughout California on general partnership formation and operation, as well as on advising clients about other possible business forms. Call today to speak with a member of our legal team about forming or operating a general partnership, or about what other business forms may make sense for your company.
General Partnerships as a Business Form
When a general partnership is formed, the owners of the business have a joint ownership share and can both play a role in the operations of the company. A partnership agreement can outline how the owners will share responsibility and control. For example, the agreement can indicate that one of the partners is a silent partner who collects money only or it can indicate that the partners will share obligations for doing work and will share equally in profits.
When a general partnership is formed, all of the partners have unlimited liability for the actions of the business. This means that the personal assets belonging to each of the partners could potentially be at risk if the business engages in illegal activities, gets far into debt or is sued.
General partnerships can be risky because you could lose your personal money, your home and other assets in the event that something goes wrong and the business is sued or goes bankrupt. All partners have unlimited liability with general partnerships, which means that if one person does something wrong or illegal, the innocent party could find himself being held responsible for the consequences.
Before entering into a general partnership, speak with an attorney about the implications that this decision can have on your financial stability. If you determine that the risks are too great of forming a general partnership, your lawyer can also help you to explore other solutions including incorporation or the formation of a Limited Liability Partnership (LLP).
Sepahi Law Group has extensive experience with helping clients to choose the right approach to forming a business in San Diego. Call today to speak with a member of our legal team and to learn more about how we can represent you.