Accounting Instruction, Help, & How To (Financial & Managerial)

General partner definition. Analyzing the definition of key terms often provides more insight about concepts. General partners can be defined as – Partner who assumes unlimited liability for the debts of the partnership; responsibility for partnership management. A general partnership with general partners is the default setting of a partnership, meaning that if two or more people start doing business and receiving revenue they are considered a general partnership unless they choose to form another type of entity like a corporation or limited partnership. Like a sole proprietor, a general partner is subject to more personal liability risk than a corporate shareholder, there being no corporate shield between the business and owner in a general partnership, no legal separation resulting from the corporation being considered a separate legal entity. A general partner has an agency to make contracts on behalf of the partnership, contracts that could bind the other partners involved in the partnership. A general partner can be contrasted with a limited partner, a limited partner being one that does have more personal liability protection due to the fact that they cannot make binding decisions about the management of the partnership. Limited partners are often more like investors putting capital into the business hoping for a return.