What protection is available through a general partnership?
In terms of asset protection, general partnerships can be even worse. Anything that one partner does affects all of the partners, because each partner of the of the general partnership is personally responsible for all obligations of the partnership. Thus each general partner's exposure to risk is increased by a factor equal to the number of general partners in the business.
Rather than carrying personal liability for activities arising out of business, you need to consider other available forms of business associations which provide greater protection. But remember - a change in the form of business ownership may affect the degree of control you have. Changing the form of business ownership also requires documentation of the transaction. A set of documents to govern how the business operates may be required and operational records for the business may need to be maintained. Tax reporting requirements and rules of taxation differ, depending on the structure of the business. The cost of creating and maintaining these documents, both initially as the business entity is formed and into the future as the entity operates, is a critical factor to consider.
Some of the more common forms of business ownership which reduce personal liability are discussed in the following paragraphs.
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