How to Become a General Partnership
(All 50 States)
Why Choose An LLC vs General Partnership
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How to Become a General Partnership (All 50 States)
Select your state below to see how to start a general partnership. We will walk you through the process of how to set it up in your state. If you prefer to use a professional check out our list of Best LLC services.
What Is a General Partnership?
General partnerships are just one of the many ways for several individuals to co-own a business. It has many similarities to a sole proprietorship. Both are viewed as an extension of the business owner as opposed to an actual separate legal entity.
Here are the two biggest differences between choosing a general partnership and other business entities:
- Lack of Asset Protection
One of the biggest differences between a general partnership and other business structures is personal asset protection. Structures such as limited liability companies. (LLC) and corporations offer limited liability protection. This means a creditor can only come after your business assets while keeping your personal assets protected.
- Taxes and Signatures
With general partnerships, the “pass-through” model applies due to the lack of legal distinction between the partners and the owners. A partnership is a business entity that has more than one owner. So, the profits and losses are reported on each owner’s personal tax return.
When it comes to signing for the business, the owners have to sign their own names instead of signing on behalf of the business. The business can also accept payments in the owner’s names such as a check for a product or service.
A general partnership can be a much simpler solution for multiple owners compared to an LLC or corporation. Although its simplicity is convenient, there are a lot of disadvantages when you compare it to a limited liability company or corporation.
If a general partnership is not the right fit for your situation, be sure to check out our guides on LLCs and Corporations. We look forward to helping your business grow!