A general partnership is formed when one or more individuals or other legal entities (sole proprietors, corporations or limited liability companies (LLCs)) associate with each other for the purpose of operating a business and sharing in profits. A general partnership may be formed by this act alone, even if the persons or legal entities have no desire to form a general partnership. A general partnership does not require any written organizational document.

Unlike a sole proprietorship, a general partnership is a legal entity which is distinct from its owners. However, all owners of a general partnership are personally responsible for the liabilities of the partnership. A general partner is even liable for damages that arise as the result of another general partner’s actions.

Example: Assume Allen and Zack both go into business together as a general partnership and Allen rents property from Paul for the partnership without getting Zack’s consent. Paul could sue Zack for the entire amount of any rent owed. Zack could then sue Allen for an equal amount of the damages. However, if Allen has no money, Zack will pay for the entire debt despite the fact Allen leased the property without his consent.