Why is General Partnership Important?
General Partnership is an agreement between two or more people who agree to share in the management of a business and its profits. It’s important to understand that General Partnerships are not limited liability partnerships, so all partners are personally liable for the debts incurred by the partnership. A General Partnership can be formed with any number of partners; there is no limit on how many partners may enter into a General Partnership.
In order to form a General Partnership, there must be an agreement between the partners. This agreement may take various forms but is usually created in writing and will include:
· The name of the partnership that they are forming
· A statement that all partners share equally for profits and losses
· How to divide up any profit or loss at the end of each year
In order to legally form a general partnership, it must also have one more partner than its total number of owners. For example if you have two partners then three people need to sign this document before it becomes valid. And finally, since Partnerships are not limited liability partnerships, all Partners are personally liable for debts incurred by the business which can lead to some unfortunate consequences should something unwanted happen. The best thing you can do is to have partners that you can trust, for starting a new business will require much more than what one person alone could offer.
This type of company needs someone who has legal knowledge as well as financial know-how because it involves the agreement and ownership rights between two or more people. A General Partnership may be formed by written document which includes: – The name of the partnership – A statement that all Partners share equally for profits and losses. And finally, since partnerships are not limited liability companies, all Partners are personally liable for debts incurred by the company which leads to some unfortunate consequences should something unwanted happen.