Why Some Entrepreneurs Still Use General Partnerships (Yes, Really)

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1. Feature: Why Some Entrepreneurs Still Use General Partnerships (Yes, Really) (4 min read)

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For the Right Jobs, GPs Still Deliver

Entrepreneurs love LLCs—and for good reason. They offer liability protection, flexible management, and minimal paperwork.

But there’s one business structure even simpler: the General Partnership (GP).

And while it’s not right for every situation, it’s far from obsolete. In fact, it may be the best-kept secret for entrepreneurs looking to move quickly, spend nothing on filings, and keep things confidential.

Thousands of professionals—from joint ventures to CPA firms—still use GPs. You just need to understand when (and how) to use one correctly.

What Is a General Partnership?

A general partnership is the simplest business structure involving more than one person. It forms automatically when:

• Two or more people

• Agree to carry on a business for profit

• Without forming a separate entity like an LLC or corporation

That’s it. Under Florida law (and most others), no public filing is required to form a valid GP.

But don’t let the simplicity fool you—a GP is still a real legal entity.

Wait—Is a GP Its Own Entity?

Yes. In most states—including Florida—a general partnership is treated as a separate legal entity from its individual partners. This was clarified and codified under the Revised Uniform Partnership Act (RUPA), a model law adopted in over 35 states to standardize how partnerships are governed.

This means:

• The GP can own property in its own name

• The GP can sue or be sued as an entity

• The GP files its own tax return (Form 1065)

If you want to open a checking, brokerage, or crypto account in the GP’s name, you’ll need to apply for an Employer Identification Number (EIN) using IRS Form SS-4—even if the partnership has no employees.

It might be a minimalist structure, but it’s not invisible.

GPs vs. Limited Partnerships: Know the Difference

Entrepreneurs often confuse general partnerships (GPs) with limited partnerships (LPs). Here’s a quick side-by-side:

Bottom line: LPs are better when outside capital is involved. GPs shine when trust and simplicity rule the day.

Florida-Specific Rules: What to Know

Florida makes GPs easy to set up—but there’s a small catch.

If your GP is named using only the last names of the partners (e.g., “Clark & Davis”), you don’t need to register anything with the state.

But if your partnership uses a fictitious or brand-style name (“Clark Davis Holdings,” “Suncoast Trading Group,” etc.), you must register that name with the Florida Division of Corporations under the Fictitious Name Act.

That registration doesn’t form the entity—it’s simply public notice that your GP is operating under a name not made up entirely of your surnames.

Bottom line: If you want maximum privacy and minimum friction, name your GP carefully.

Where GPs Shine

Used correctly, GPs can be the perfect structure for:

1. Investment and Trading Partnerships

Say two or three trusted friends want to pool funds and trade equities, crypto, or private deals. They don’t need outside money. They don’t need liability protection. They just want:

• One brokerage account

• A simple profit split

• No public filings or State annual reports (like an LLC)

A GP can handle this arrangement efficiently—with minimal cost and compliance.

2. Low-Risk Service Firms

Many older law and CPA firms still operate as GPs. However, these are:

• Regulated professionals

• Covered by malpractice insurance

3. Simple Holding Companies

Here’s a smart move we see often: using a GP as a simple, low-cost, private holding company.

Example:

• A GP is formed by two or more partners using their last names

• That GP holds membership interests in various LLCs, each of which holds specific assets (like real estate, ecommerce, or consulting)

This structure:

• Keeps the GP private and off most public records

• Uses LLCs to contain risk

• Allows the GP to act like a lean, informal family office

• Avoids the ongoing costs and filings of a parent LLC or corporation

Where GPs Are the Wrong Tool

As attractive as the simplicity may be, GPs carry serious liability exposure.

Every general partner is personally liable for all partnership obligations—including those created by another partner.

Use caution if your business:

• Deals with the public

• Has employees or contractors

• Has physical premises or leases

• Incurs debt

• Involves partners you don’t fully trust

For anything in those categories, you likely need an LLC, LP, or corporation.

And if you’re buying real estate? Always use an entity with limited liability—never a bare GP.

What a Good GP Agreement Looks Like

Even though GPs don’t require public filings, you should always have a written partnership agreement. A strong one includes:

• Partner contributions and ownership percentages

• Profit/loss allocations (not always the same as contributions)

• Rules for distributions and withdrawals

• Appointment of a Managing Partner and Secretary

• Voting rights (often 1 vote per partner)

• Clear process for removing or replacing a partner

• Buyout formula and payment terms (especially if disputes arise)

• Limits on assigning or pledging partnership interests

• Indemnity and release terms upon disassociation

• A governing law and venue provision

• And, last but not least, a good insurance policy!

Our Florida GP template, available for Premium Subscribers and reviewed for this article, covers all of the above—with strong protections around disassociation, buyouts, and partner rights and obligations. Upgrade to Premium here and get the template now.

Final Thought: A Legal Canoe for Calm Waters

Think of the general partnership like a canoe: fast, cheap, maneuverable—and best used on calm, trusted waters. It’s not a 35-foot center console. But it doesn’t need to be.

If your business:

• Has no public risk exposure

• Has minimal general risk or liabilities

• Involves only trusted insiders

• And values privacy and simplicity

…then a GP might be the right vessel.

Just remember: it still requires structure. It needs its own EIN and a strong insurance policy. And if it’s going to touch money, it needs a serious agreement—one that treats this low-cost partnership like a high-stakes relationship.

Before forming any partnership structure, consult with a licensed attorney and CPA to fully evaluate liability exposure, tax treatment, and your long-term goals.

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!