What distinguishes a general partnership from a limited partnership?

A general partnership is characterized by the fact that all partners have equal responsibility for managing the business and share jointly in its liabilities and profits. Each partner in a general partnership has the authority to participate in the day-to-day operations and decision-making processes. This equal sharing of management responsibilities and liabilities means that each partner is personally liable for the debts and obligations of the partnership, which is a fundamental characteristic that distinguishes it from a limited partnership.

In contrast, a limited partnership features two types of partners: general partners, who manage the business and are fully liable for the debts, and limited partners, who typically invest capital but do not participate in managing the business and have liability limited to their investment. This distinction allows limited partners to protect their personal assets from the partnership's liabilities while still being able to participate financially.

Understanding this difference is crucial for potential partners in deciding on the structure of their business and the implications it has for liability and management.