The general partnership is formed by the businessmen or traders who decided to join forces. It is simply a business agreement between the parties who decided to work together. Generally, there is an imposable unlimited liability in the general partnership. They will be severally and jointly liable for any debts that occurred due to the partnership. Therefore, all the partners can manage the general partnership as they have equal rights and duties for managing and carrying on the business for which the partnership is formed.
In a general partnership, two or more people form a partnership for legal business under the state laws, applicable to the partnership to work as co-owners. Therefore, the general partners manage and conduct the business activities and assume liabilities for debts and other obligations. They equally participate in the business meetings and take the decisions relating to the management of the business. Each partner has equal voting rights to make the decisions and expressed his or her opinion. If the investment capital of general partners is different, they are usually granted voting rights in proportion to their capital investment.
Managing Rights in Limited Partnership
A limited partnership is nothing but combination of both general and limited partners. The general partner has unlimited liability in a limited partnership compared to the limited partner, who has limited obligation in proportion to their capital investment for any business debts or any other legal obligations. However, the limited partners in a limited partnership do not participate in managing the business and other related decisions. They do not assume the responsibility to participate in the decision-making process and management of the company. They are merely regarded as investors.
The limited partners have no control over daily activities related to carrying business and other related activities. They possess personal assets protection against the corporate debts related to the partnership. The general partners take up all the important decisions, and in the case of more than one general partner, the majority of general partners are considered.
Managing Partner
Sometimes, in a partnership, a person specifically acts as a manager to perform daily activities and plays an important role in managing the company. He or she prepares strategies and plans for the goals of the partnership, implements them, and manages the company’s financial affairs, such budgeting, filing, billing, sometimes responsible for human resource management, office management, deciding the shares of the partners, etc. They are entitled to their share of income as a partner in such partnership and receive payment for their management duties.
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