How General and Limited Partnerships Work | Introduction to Legal Structures

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Partnerships represent a common form of business ownership for businesses with more than one owner. The most common type of partnership is a general partnership. Typically--but not always--a general partnership places equal responsibility on the general partners. Both partners are also personally liable for the debts of the business.

Due to the unattractive nature of unlimited liability, business owners can also elect to utilize a limited partnership. Although they share many similarities to a general partnership, limited partnerships establish almost a tiered system (general partners and limited partners) allowing some owners to incur greater risk while others can be involved with relatively low risk.