In a general partnership, what is the liability status of the partners?

In a general partnership, all partners share unlimited liability for the debts and obligations of the business. This means that each partner is personally responsible for the entire amount of any business debts, not just their individual investment. If the partnership cannot meet its financial obligations, creditors can pursue the personal assets of any or all partners to satisfy those debts.

This structure is designed to ensure that all partners are equally invested in the success of the business and that they are motivated to make decisions that will protect the partnership as a whole. The lack of limited liability is a fundamental characteristic of general partnerships, differentiating them from limited partnerships where at least one partner has limited liability based on their investment amount. Thus, the liability status accurately reflects the vulnerabilities and responsibilities partners take on when entering a general partnership.