How are general partnerships different from limited partnerships?

When forming a business, it is important to have all of the necessary information that will allow you to make the decisions that are best for your situation. Many times, people want to start a business with a partner, but they aren’t aware of the different types of partnerships available to them. The two types of partnerships available for a business to consider are general partnerships or limited partnerships.

A general partnership allows two people to create an agreement where they decide that they will equally share all of the profits as well as liabilities that the company will incur. Some business owners choose to create a physical paper contract and others simply make a verbal agreement. There aren’t laws regarding how you make this agreement. It is important to be aware that if one of the partners gets into financial trouble or illegal activities, the burden can fall on both partners.

Limited partnerships require one of the partners to be the manager and take on all of the risks. This partner will be the one who is held responsible in the event that they find the business in financial trouble, or any other issues. The other partner or partners will not be held liable. Limited liability partnership is a little different than a regular limited partnership. These partnerships do require a formal agreement because all of the partners are permitted to manage the business and they can limit their liability and protect their personal assets if they are sued.

If you need assistance in determining what type of partnership is right for you, contact an experienced business law attorney who can assist you.

Contact the Law Offices of Richard E. Novak today to discuss the facts and circumstances surrounding your New Jersey traffic violations, intellectual property or business litigation matters.