General Partnership Laws & Regulations

By Holly Cameron

A partnership is a form of business entity owned by more than one partner. The key consideration is that the business is conducted with the aim of making a profit. Most partners enter into a formal written partnership agreement, setting out their rights and obligations, but a partnership can operate effectively on the basis of a handshake. Each state has its own laws relating to partnerships but the general principles remain the same across the United States.

Uniform Partnership Act

The National Conference of Commissioners on Uniform State Laws has drafted a uniform set of laws designed to govern all partnerships in the United States. Uniform laws aim to facilitate business relationships across state borders; the Uniform Partnership Act of 1997 has been incorporated into the laws of many states. Otherwise, a state may have its own regulations.

Responsibilities and Liabilities

Unless the partnership agreement states otherwise, each partner takes responsibility for managing the business and can bind the other partners by signing legal documents in the partnership name. General partnership laws state that each partner is also equally responsible for all the debts of the partnership. This means that if the partnership owes money to another business that business can sue each of the partners individually for the full sum owed.

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Business Name

Most states require a partnership to register its business with the relevant authorities. If the partnership takes a name other than the names of the partners, it must also register the name with the secretary of state. No partnership may adopt a name that is already in use by or very similar to that of another business entity in the state.

Resolving Disputes

Partners generally resolve disputes by calling a meeting and formally recording a vote. By default, each partner has an equal vote, but the partnership agreement may state that certain partners’ votes carry a greater weight than others, for example if they have contributed a greater sum to the business. If a dispute cannot be resolved by means of a vote, the partners always have the option of dissolving the partnership.


A partnership does not pay tax; instead, each partner pays tax on his share of the income generated by the business. The IRS requires each partnership to file an information return to list the income, profits and losses. Depending on the location of the business, a partnership may also have to file information returns with the relevant state tax authorities.

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California General Partnership Law


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