A general partnership is a legal form in which two or more people work together or form an association to start a business to make a profit as a group. The founding process is also referred to as founding a company. As a rule, profits are divided equally among the shareholders, who are also equally personally liable for the entire company. However, the general partnership is dissolved if one of the partners decides to withdraw from the joint business.

While general partnerships offer some tax exemptions, it's worth noting that they have a distinct disadvantage when it comes to personal liability. In an open partnership, the actions of one partner are automatically deemed to be endorsed by the others, making each partner personally liable for the actions of the others. The liability of the partners in a general partnership can be summarized as follows:

Each partner is responsible for his own actions.
Each partner is responsible for the actions of all other partners.
Each partner is responsible for the actions of the employees of the partnership.
Therefore, we strongly recommend that you think twice and do your due diligence on your potential business partners. A good alternative to a general partnership can be a limited partnership or a limited liability company.

General partnership owner
The owners of a general partnership are known as "general partners" and have unlimited liability for the partnership. After the conclusion of the company formation agreement, they are regarded as shareholders. Each partner is authorized to conduct business on behalf of the company without the permission or authorization of the other general partners. General partners must always take tax planning into account and it is strongly recommended that they do not take any material risks for the company as their personal wealth would be at risk.

Functions of an open trading company
General partnerships are formed for various reasons and have certain legal implications, e.g. for corporate governance procedures, profit-sharing, liability for shareholder debts, etc. Profits are always shared equally among all shareholders in the company, and they have absolute autonomy to run the business and respectively. In addition, all partners are considered liable if one or more of them have dealings with a third party, as each partner can enter into and execute agreements on behalf of the partnership as a whole.

Advantages of an open trading company
Like any other legal entity, general partnerships have their advantages and disadvantages. However, obvious partnerships offer several benefits that can speed up the incorporation process as well as increase the efficiency and longevity of the business. Perhaps the greatest advantages of partnerships are simplified taxes and less paperwork. All profits and losses are handled by the partners, and forming a general partnership requires less time and less paperwork than other forms of partnership. The paperwork is usually very simple and the company formation should be completed within the jurisdiction where the agreement was issued.