General Partnership

If you are a co-owner of a business, and you have not formally created a corporation, LLC, LLP, LP (or LLLP), you are operating a general partnership. Again, you have unlimited, personal liability for all of the businesses debts, including the acts of employees. In the case of the general partnership, you also have unlimited, personal liability for the acts of all of the other owners.

Must have two or more owners. No formal requirements to create or operate this form. All owners have unlimited, personal liability for all of the businesses debts. All owners personally hire all employees, and thus all of the owners have unlimited, personal liability for the acts of employees. In addition, each owner has unlimited, personal liability for the acts of all of the other owners. Exposure to liability is so great in this form that, simply put, it should not be used.

Not a separate taxpaying entity: Income is reported on the owners' personal tax returns, which may result in lower taxes, and the business files only an information return with the IRS. Relatively simple business form to create and operate-basically a sole proprietorship with two or more owners.

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