A general partnership is an association of two or more people or organizations who agree to cooperate in carrying out some business or other activity. The agreement by which partners may form a partnership may be written, oral or impled, and it is not necessary to file any document with any government agency. Indeed, a court may rule that people or entities conducting certain types of business with one another are partners, even if they never intended to form a partnership.
In Delaware, a statement of partnership existence may be filed with the Secretary of State if the partners opt to do so; such a filing may be needed for the partnership to open bank accounts, secure business loans, and carry out other business functions. Delaware partnerships are governed by the Delaware Revised Uniform Partnership Act, 6 Del. C. §§ 15-101 et seq. (â€œDRUPAâ€), although many of the provisions of DRUPA may be modified by the partnership agreement if the partners so wish.
Partners in a general partnership do not enjoy the limited liability protection of stockholders of corporations, members of limited liability companies, limited partners in a limited partnership and statutory trusts. This means that partners in a general partnership may be held personally liable for debts and obligations of the partnership.
Usually, a general partnership is not a taxable entity for U.S. federal or Delaware income tax purposes. Partners are taxed on their income from the partnership. In rare cases, partners may elect to be taxed as a corporation.