General Partnership

What Is a General Partnership?

A general partnership (GP) is an unincorporated business with two or more owners. Those owners share the business responsibilities. Under a GP, the general partners are personally liable for any debts and obligations of the business. Partners are required to report their share of the profits and losses on their personal tax returns.

Compared to other entity structures, it is easy to run a general partnership, as there are minimal ongoing formalities such as meetings or annual reporting requirements. Partners can enter into contracts or deals that are binding on other partners. This is convenient, but it does mean that you should only go into a GP with a person or persons you can trust.

What Are the Advantages and Disadvantages of a General Partnership?

There are advantages and disadvantages to running a general partnership as with any entity type. Before starting a business, you need to be well aware of what to expect and what troubles you could run into.

Advantages

• Easy to start. GPs are one of the most straightforward business entities to start. There are no registration or incorporation requirements.
• Flexible. GPs allow for negotiations in terms of allocating profits and losses, transfers of interest, and more. Partners can customize the company’s management structure as needed.
• Partnership agreements. In the event partners disagree on a business decision, the partnership agreement can resolve the issue. Agreements outline the governing structure and individual owners’ rights and responsibilities.

Disadvantages

• No liability protection. When you decide to form your business as a general partnership, the owners do not have limited liability protection. Business debts and lawsuits can seize your home, car, savings, and other personal assets.
• Lack of structure. While GPs are flexible, the lack of structure can be a disadvantage. Contentions may involve finances, general structure, or responsibilities. Partners are liable for each other’s decisions, which can affect profits and reputation.
• Complex dispute resolution without a partnership agreement. While a partnership agreement is recommended, it is not required. As such, disputes among partners can result in the business failing. A general partnership dissolves when one of the partners leaves, becomes disabled, or dies.

Appointing a Registered Agent as a GP

General partnerships are formed in the state the partners conduct business. In addition to registering as a GP with the state, you must appoint a registered agent.

A registered agent is a business’s legal appointee to receive notices of lawsuits and other legal or government notices during regular business hours. State law requires every GP to have a registered agent. A registered agent must have a physical office address in the state where you conduct business. The documents they collect are often time-sensitive, so choosing a reliable registered service agent is essential.

Harbor Compliance is also a nationwide registered agent provider. We support your company as it grows, offering local offices with same-day document scanning. Easy online ordering means you have service in minutes. View our service page or contact us for more information.

Contact Harbor Compliance

Harbor Compliance’s registered agent service provides your GP's forms and filing instructions. When you work with us, you are immediately granted online access to a registered agent address, and you can expect same-day delivery of your documents. While we handle the registered agent element of your business, you can focus on meeting your goals and expanding your general partnership.