IMPORTANCE OF ENTITY PROTECTION – LIMITED PERSONAL LIABILITY
Why sole proprietorships and general partnerships offer no protection at all (continued).
A General Partnership is an unincorporated company formed by two or more persons. As such, the owners are all personally liable for any legal actions or debts the company may face. Regarding asset protection, general partnerships can even be worse than sole proprietorships. Anything that one partner does affects all of the partners because each partner is personally responsible for all obligations under the partnership. Thus, each general partner’s exposure to risk increases as the number of partners increases.
As is the case with a sole proprietorship, owners of a general partnership have unlimited personal liability. Generally, each partner is jointly and severally liable for the partnership’s obligations. Joint liability means that the partners can be sued as a group while several liability means that the partners are individually liable.
Disclaimer: This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. If you have questions or need specific advice relating to the matters contained herein, please contact Lovaas & Lehtinen, P.C.
Why sole proprietorships and general partnerships offer no protection at all (continued).
A General Partnership is an unincorporated company formed by two or more persons. As such, the owners are all personally liable for any legal actions or debts the company may face. Regarding asset protection, general partnerships can even be worse than sole proprietorships. Anything that one partner does affects all of the partners because each partner is personally responsible for all obligations under the partnership. Thus, each general partner’s exposure to risk increases as the number of partners increases.
As is the case with a sole proprietorship, owners of a general partnership have unlimited personal liability. Generally, each partner is jointly and severally liable for the partnership’s obligations. Joint liability means that the partners can be sued as a group while several liability means that the partners are individually liable.
Disclaimer: This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. If you have questions or need specific advice relating to the matters contained herein, please contact Lovaas & Lehtinen, P.C.
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