What defines a general partnership?

A general partnership is characterized by the fact that all partners share unlimited liability for the debts and obligations of the partnership. This means that if the partnership incurs debts or faces lawsuits, each partner is personally responsible for the full amount. This structure allows for shared management and profit but also poses significant financial risks to all partners, as their personal assets can be at stake if the partnership cannot meet its obligations.

In this context, the feature of unlimited liability is a central element that defines how a general partnership operates and differs from other forms of business ownership, such as a limited partnership where specific partners have limited liability, or corporations, which are distinct legal entities that provide liability protection to their owners. The concept of requiring minimum capital investment does not specifically apply to general partnerships, as they can often be formed with minimal capital, and the distinction from limited partnerships does not hinge on capital but rather on the type of liability partners assume.