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GENERAL AND LIMITED PARTNERSHIPS

The primary characteristic of partnerships is a voluntary arrangement between partners to place their money, effects, labor, and skills into a business enterprise with the common understanding that there will be a proportional sharing of the profits and losses among the partners. For income tax purposes, a partnership is considered a conduit and is therefore not subject to taxation. Instead, the various items of partnership income (i.e., gains and losses) flow through to the individual partners and are reported on their personal income tax returns.

General Partnerships

In a general partnership, the parties carry on all their trade and business for the joint benefit and profit of the parties concerned. Another common characteristic of general partnerships is that the partners share the profits and losses as well as management duties equally, even though start-up funds or other capital contributions may vary. Although general partnerships have the tax benefit of pass-through income (i.e., no taxation on the business entity itself), partnerships have become less favored business forms since the rise of limited liability companies and limited liability partnerships, which are discussed below. In New York State, the formation of a general partnership requires the filing of an Assumed Name Certificate (following an agreement of the partners) with the clerk of the county or counties in which business is conducted.

Limited Partnerships

A limited partnership consists of one or more general partners, who are both jointly and individually responsible as ordinary partners, and by whom the business is conducted, and one or more special partners, who contribute cash payments as capital to the common stock but are not liable for the debts of the partnership beyond the amount contributed. Formation of a limited partnership requires the filing of a Certificate of Limited Partnership with the Department of State.

For more information about partnerships generally:
For more information about limited liability partnerships:
For more information about general partnerships in New York State:
For more information about limited partnerships in New York State: