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General partnerships

California Business Partnerships


  • Lower Cost: Typically less costly to establish.
  • Taxation: Pass through tax benefits; no entity taxation.
  • Formation & Dissolution: Partnerships are relatively easy to form and dissolve.
  • Ease of Operation: Partnerships offer ease of management and operation, with partners in control of day-to-day operations.


  • Liability: Each partner can be held liable for all debts, obligations or actions taken by a partnership.
  • Longevity: Partnerships generally dissolve with the death or departure of a partner; the sale or longevity of a business can be complicated by a partnership's structure.
  • Capital Investment: Partnership structures are not conducive to the offering of stock to raise capital or for the implementation of other investment structures.

When properly established, a business partnership can be a great way to divide the responsibilities, obligations and rewards of a business venture. However, ill-conceived or unplanned business partnerships are a primary reason for business dissolution or failure.

The Los Angeles business lawyers at Howard Law have the experience and knowledge to help your business partnership avoid common pitfalls and mistakes in its establishment, operation or dissolution.

A partnership is a business structure designed for ownership by two or more people. While not required by law, it is a good idea to consult with an attorney experienced in California business law to draft a partnership agreement.

Partnerships that experience problems are often those established without consultation with an experienced professional capable of foreseeing many of the common challenges a business partnership faces. The ease of forming a partnership is often attractive to relative business novices, which in turn leads to problems or disagreements when unforeseen circumstances arise. What will happen in the event of a partner's divorce? What if one partner files bankruptcy? These are questions best answered by a qualified legal professional.

Unless otherwise stated and specifically addressed by a legal agreement, partnerships share joint authority and joint liability. Much like a marriage, this means a partnership is seen as a single legal entity and loans or other business obligations assumed by one partner become the liability of each member of the partnership. A knowledgeable and experienced Los Angeles business law firm can assist you in forming a solid business partnership that can help ensure your partnership has the fundamental structure to thrive and survive for years to come.

Partnership Agreements

State law will govern partnerships in the absence of a partnership agreement, or for circumstances not covered by a partnership agreement. A California Partnership Agreement should address a number of areas, including:

  • Entity: Formal name of Partnership
  • Contributions: Including cash, assets and services each partner will make to the partnership.
  • Ownership: A detailed outline of the ownership interest and rights of each partner.
  • Income and Liability: Formally state how income, losses, liabilities and obligations will be divided among the partners.
  • Authority: The scope or limits that will be placed on a partner's authority. An example is the ability of a partner to obligate a partnership for debts, which is permissible without the consent of all partners under the law unless otherwise stated as part of a partnership agreement.
  • Duties: Outlining the management structure, duties and obligations is a good idea when drafting a partnership agreement. Putting the structure in writing can alleviate ambiguity and problems with the operation of a partnership.
  • Dissolution or Death: Reasonable buyout terms and a structure for termination of a partnership or death of a partner should be established to help ensure the long-term viability of a partnership.
  • Expanding Partnership: A structure for admitting new partners may be established as part of a partnership agreement, to help ensure the business structure can accommodate growth or future needs of the partnership.
  • Dispute Resolution: Providing a manner of dispute resolution should be part of a comprehensive partnership agreement. Mediation or arbitration clauses can help prevent a partnership from being saddled with debt from a legal dispute in court.

The business litigation attorneys at Howard Law represent clients with business formation, dispute resolution and litigation in Los Angeles and the surrounding areas, including Santa Ana, Riverside and Anaheim.

Los Angeles Business Partnerships - Call (800) 872-5925 - Howard Law