General Partnership

This is another relatively informal business entity is a “general partnership”. These entities do not require documentation to come into formation. However, it is always a good idea to document your relationship and responsibilities with a written agreement. Like sole proprietorships, general partnerships do not provide any asset protection.

Additionally, they can create unexpected exposure. For example if Partner A decides to make a purchase in the partnership name, Partner B is very likely to be personally responsible for the debt even if he did not sign any documents.