General partnerships differ from limited partnerships by having only general partners. A limited partnership has at least one general partner to manage the partnership and one or more limited partners whose participation is passive and whose risk is limited normally to the extent of the limited partner's investment in the limited partnership.

Each state has adopted either the Uniform Partnership Act or the Revised Uniform Partnership Act so that, except for minor variations in particular states, the law of general partnerships is similar throughout the United States.

In a general partnership, each partner bears responsibility for the partnership and acts of the other partners on behalf of the partnership. Each partner also shares in the profits and losses of the partnership. An important consideration to keep in mind when forming a general partnership is that non-partnership assets of individual partners are subject to judgment if the assets of the partnership are not sufficient to cover partnership debts.

Although partnerships may be formed by oral agreement, written agreements serve to avoid unnecessary disputes. Written agreements also may provide for variations from the following standard provisions of state laws of general partnerships:

• General partners share equally in profits or losses and in management of the partnership;
• All general partners must agree on the admission of new partners, and all partners have equal authority to act on behalf of the partnership (although when there is a majority decision of a partnership, that majority will control business of the partnership so long as partners in a minority are fully informed and fairly treated); and
• General partners serve as each other's agent, and each general partner may act on behalf of the partnership so long as the act is within apparent authority of a general partner.

There are limits to the power of an individual general partner. A partner may not bind his partnership without express authority and confess to a judgment against the partnership, sell partnership goodwill, assign partnership property to creditors, submit partnership claims to arbitration, or otherwise prevent the partnership from carrying on its usual business.

If a dispute arises among partners that cannot be resolved, dissolution of the partnership may be sought. Such dissolution also occurs upon the death, incapacity, bankruptcy, departure, or expulsion of a partner unless otherwise provided in the partnership agreement. In a dissolution, an accounting of partnership assets and debts is made, and any remaining surplus is distributed evenly among the general partners or their representatives.

General partnerships may be considered advantageous for several reasons. Profit flows through to partners and is taxed once as partner income rather than once as corporate income and then again as a corporate distribution. A general partnership may be able to obtain more operating capital than individual partners on their own could obtain. The potential to become a general partner could be a motivating factor in the partnership's hiring efforts. Finally, complementary skills of partners could produce added benefits when joined in a partnership.

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