General Partnership
An unincorporated business association of two or more persons who carry on a business for profit as co-owners, with shared management authority and unlimited personal liability.
What Is a General Partnership?
A general partnership is the default form of multi-owner business that arises automatically when two or more people conduct business together for profit without filing to form another entity. The Uniform Partnership Act (UPA) and the Revised Uniform Partnership Act (RUPA), adopted in most states, govern general partnerships when no written agreement specifies different rules.
Key Characteristics
- Each partner has equal management authority unless agreed otherwise - Partners share profits and losses equally by default - All partners are jointly and severally liable for partnership debts - Any partner can bind the partnership in matters within the apparent scope of business - Pass-through taxation: the partnership files Form 1065, partners report income on personal returns
Why a Written Agreement Matters
Without a partnership agreement, default state law governs profit splits, management, dissolution, and exit. A written agreement should address capital contributions, profit and loss allocations, decision-making thresholds, withdrawal procedures, dispute resolution, and how the partnership ends if a partner dies, withdraws, or becomes incapacitated. Many partnerships eventually convert to LLCs or LLPs to limit personal liability while preserving pass-through taxation. Fiduciary duties of loyalty and care apply between partners.