What defines a General Partnership?

A General Partnership is defined by the principle that all partners share joint liability for the debts and obligations of the business. This means that each partner is personally responsible for the partnership's liabilities, which can include debts incurred by the business or legal judgments against the partnership.

This joint liability is a key characteristic that differentiates a General Partnership from other forms of business organizations, such as Limited Partnerships, where some partners have limited liability and their responsibility is restricted to the amount they have invested.

In a General Partnership, each partner not only shares profits and losses but is also exposed to risk concerning the full extent of the business’s obligations. This creates a level of trust and co-dependence among partners, emphasizing the importance of choosing partners wisely, as one partner's actions can directly affect the financial health and legal standing of the entire partnership.