Partnerships       General Partnerships      A general partnership does not offer the protection from personal liability of Corporations or Limited Partnerships (see below). However, a general partnership may be an appealing alternative to incorporation when individuals are not concerned about personal liability.  While they don’t require a written agreement, such an agreement can help solve common problems like profit and loss sharing.    A partnership occurs when two or more persons associate to carry on a business for profit as co-owners. The word “person” may be misleading, as it could refer to individuals, corporations, limited liability companies, or even other partnerships. In California, general partnerships are governed under the Uniform Partnership Act of 1994 (RUPA) (Corp C §§16100-1692).      According to the RUPA, partnerships are considered as separate entities from the partners. This way, they can own their own property apart from their owners. In the past, the partnership would terminate if the partners left or switched membership. Today, if the membership of partners ever changes, the partnership remains in existence. Corp C § 16801. A joint venture, while it shares many of the attributes of a general partnership, is formed for a limited purpose. Unlike a general partnership, it is usually not intended to continue indefinitely.

Limited Partnerships    Under a limited partnership form, one or more limited partners and one or more general partners enjoy different levels of control and liability for the business. In order to form this entity, a certificate of limited partnership must be filed and recorded. Individuals must be careful to follow all of the requirements of the governing statute when forming a limited partnership. Otherwise, the partnership risks being treated as a general partnership, resulting in potentially unlimited liability. Generally, California limited partnerships are not subject to federal or California income taxes. Otherwise, they are treated as general partnerships. If the limited partnership is required to file an information return, it must pay an annual tax for the privilege of doing business in California.