Updated August 05, 2022
A general partnership (GP) agreement is between partners that each share equal liability in the partnership. In a general partnership, there are no limited members. Meaning, all partners have the same financial and legal personal liability.
Main Purpose
A general partnership holds all partners liable. Therefore, it should be selected when all partners are actively involved in the business.
Pros and Cons
Below are the pros and cons of a general partnership in comparison to other types.
Pros
- Easy to create.
- Easy to report taxes.
- Easy to dissolve.
Cons
- All partners are personally liable.
- All partners are personally liable for other partners’ actions on behalf of the business.
- Terminates if a partner dies or withdraws from the entity.