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General Partnership

DEFINITION

Partnership of two or more individuals with the intent of earning profit.

EXPLANATION

A general partnership is a business dynamic whereby two or more parties work with one another to achieve a common goal. Such a partnership includes the distribution of assets, earnings, as well as all legal debts of a business entity.

Liabilities revolved around such a partnership is limitless. All personal assets are therefore liable in terms of the responsibilities revolving around a partnership. All individuals involved in such a partnership are equally held accountable for all actions committed.

Prerequisites:

Two or more individuals must be involved in a General Partnership

Every partner acknowledges to be held reliable to any liability the partnership may come across

Proof of Partnership either verbally or written.

Benefits:

Unlike other partnerships, a general partnership does not pay any income tax. Partners have the freedom and movement to interact and make decisions and agreements without any consent from other parents in any transactional activity that takes place.

Another advantage of a general partnership is the collaboration and helpful council partners can share with one another. This can be a big relief with a partners everyday duties and assignments.

Obstacles:

The fact that all partners are held to the same level of responsibility in all business related transactions in a general partnership, any misdoings can equally impact all  partners in a very dreadful way. The question of trust, integrity, and management play a huge factor in determining whether or not this partnership will be a success or a flat out bust.

Furthermore, since there are multiple parties involved, there is a very high possibility where conflict and disagreements may become an issue in the scenario where not every associate involved is on board in making a decision in the best interest of the business.

General Partnerships vs. Other Types of Partnerships:

Limited Partnership- More government control, involvement, and regulations. Must pay taxes and go through a longer establishing process when creating a business. A mixture of both a general partnership and limited liability partnership. The primary partner is to bear responsibility for debts and other issues surrounding the business, while the other partner is to be held accountable to the extent of their share of investments into the business.

Sole Proprietorship- Business only revolves around one individual who bears all responsibility solely.

Limited Liability Partnership- A partnership which involves more Tham one individual. In the scenario where one of the partners commits a wrongdoing, the other partner(s) will not be held to the same level of legal consequences in any event pertaining to assets.

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