Understanding General Partnerships

Summary: A company under the ownership of several partners who make equal contributions.

A General Partnership is a business arrangement in Singapore involving multiple owners, requiring at least two partners but not exceeding 20. For more than 20 partners, a company has to be officially incorporated.

In a General Partnership, partners bear unlimited responsibility due to their inability to form a distinct legal entity, which means each partner is personally taxed on their portion of the income. Opting for a General Partnership can be an attractive alternative to setting up a sole proprietorship or incorporating a company.

Do remember that all partners are personally accountable for the business’s debts and losses, even those incurred by others. This means each partner’s liability is uncapped.

 

The Pros and Cons of General Partnerships

Much like sole proprietorships, a General Partnership comes with unlimited liability. Further, each partner is answerable for the actions of their counterparts. This feature can lead to higher risk, so the General Partnership structure should be chosen only if other options have been explored and deemed inappropriate.

 

The Basics of Partnerships

One of the fundamental ideologies of a General Partnership is the principle of consensus. Any significant decision that impacts the operation of your business should be arrived at by agreement. It’s advisable to ensure your partnership agreement outlines the instances when a partner might supersede consensus and the process they would need to follow in such a case.