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These come in two types: general and limited. In general partnerships, both owners invest their money, property, labor, etc. to the business and are both 100% liable for business debts. In other words, even if you invest a little into a general partnership, you are still potentially responsible for all its debt.


General partnerships do not require a formal agreement—partnerships can be verbal or even implied between the two business owners.

Limited partnerships require a formal agreement between the partners. They must also file a certificate of partnership with the state. Limited partnerships allow partners to limit their own liability for business debts according to their portion of ownership or investment.


Advantages of partnerships:

  • Shared resources provide more capital for the business

  • Each partner shares the total profits of the company

  • Similar flexibility and simple design of a proprietorship

  • Inexpensive to establish a business partnership, formal or informal



  • Each partner is 100% responsible for debts and losses

  • Selling the business is difficult—requires finding a new partner

  • The partnership ends when any partner decides to end it

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