General Partnership

San Francisco Bay Area Business Partnership Attorneys

A general partnership must have two or more persons engaged in a business for profit. Unless otherwise provided by the partnership agreement, all partners are liable jointly and severally for all obligations of the partnership unless agreed by the claimant. Profits are taxed as personal income for the partners.

Advantages of a General Partnership

A general partnership shares with the other business partnership structures LLPs and LLCs the attributes of flexibility of management styles, flexibility of capital and contribution structures, “pass through” tax treatment, and lack of corporate formalities. Under most state laws no written partnership agreement is even required. A corporation, by contrast, must have articles and bylaws, and an LLP or LLC must register with the state and in almost all states must have either a written partnership or operating agreement.

Disadvantages of a General Partnership

The biggest disadvantage of a general partnership is its lack of business liability protection for its individual owners. Under the general partnership law of most states, each and every partner is jointly and severally liable for all of the partnership's debts, liabilities and obligations. Worse yet, under joint and several liability principles, an injured party could choose to sue only one of the partners and recover the entire judgment solely from that partner.

Another worst-case scenario occurs when an injured party sues all of the partners, but because one or more of the partners is financially insolvent or "judgment proof," the solvent partners are held responsible for the entire amount of the judgment. As with an LLP or LLC, a general partnership must have at least two partners. For two-owner firms, this business partnership structure presents continuity problems should one of the partners die or become disabled.

Contact Our Lawyers

At the Law Offices of G. J. Mugg, our attorneys and staff understand all of the advantages and disadvantages of a general partnership and can help you determine if this form of business is right for you. Our lawyers serve the needs of business clients nationwide, though the majority of our clients have some business interests and concerns in the Bay Area, including San Francisco, San Jose, Oakland, North Bay, East Bay, South Bay, CA, and the California counties of San Francisco, Alameda, Marin, Sonoma, Napa, Solano, Contra Costa, San Mateo, and Santa Clara.

For further information about a general partnership from our attorneys, please contact us today. We charge no fees for the first hour of initial consultations, provided you retain our lawyers for future work. Every subsequent hour of the initial consultation incurs half our regular charges.