General partnership: features, legal requirements and advantages

The general partnership is one of the most traditional and personal business structures, well-suited for small businesses or professional associations that require trust and collaboration between partners. In this article, we explore the defining characteristics, legal setup, and benefits of a general partnership — helping you decide whether this structure fits your business needs.

Summary

1. What is a general partnership?
2. Key features of a general partnership
3. Advantages of a general partnership
4. Disadvantages of a general partnership
5. Requirements to form a general partnership
6. Real-life examples of general partnerships
7. Comparison with other business structures
8. Is a general partnership right for you?

What is a general partnership?

A general partnership is a type of commercial entity in which two or more individuals join together to conduct a business activity. Partners share both the profits and the liabilities — including unlimited personal liability for the business’s debts. If the business cannot meet its obligations, partners must cover them with their own personal assets.

This model is considered personal in nature, as trust and active participation among partners are essential to its success.

Key features of a general partnership

Unlimited and joint liability: All partners share equal liability. Any one partner can be held accountable for the full amount of the company’s debts, not just their own share.

Minimum of two partners: A minimum of two individuals is required. There’s no upper limit, as long as management responsibilities are clearly defined.

No minimum capital requirement: Unlike other structures, there’s no minimum capital to start. Contributions can include money, assets, or labour.

Trading name (business name): The business name should include the names of all partners or the phrase “and company,” followed by “general partnership” or “G.P.”

Legal framework: Governed primarily by commercial law. Formation requires a notarised deed and registration with the commercial registry.

Personal approach: All partners are typically involved in management unless otherwise agreed.

Advantages of a general partnership

Simple formation: No minimum capital and a relatively easy setup process.

Active involvement: All partners have a say in the business, encouraging collaboration.

Flexibility: Ideal for family-run businesses, local shops or liberal professions such as law firms or medical practices.

Mutual trust: Built on trust between partners, with decisions made by consensus.

Disadvantages of a general partnership

Unlimited personal liability: Partners risk their personal wealth — a major financial exposure.

Decision-making conflicts: Equal involvement may make consensus more difficult.

Lack of continuity: The business may dissolve if a partner dies, becomes incapacitated or leaves.

Difficult to onboard new partners: All current partners must agree before admitting a new member.

Requirements to form a general partnership

Creating a general partnership involves several steps:

Public deed of incorporation

The founding deed must include:

• Full identification of each partner
• Company name
• Each partner’s contributions (capital, goods or services)
• Duration of the partnership (fixed or indefinite)
• Management structure (individual, joint, etc.)

Registration with the commercial registry

Once notarised, the deed must be submitted for registration to obtain legal status.

Obtain a tax identification number (NIF)

Required for tax purposes and issued by the Spanish tax agency.

Internal agreements

Optional but useful for clarifying how profits are shared, how disputes are handled or how exits are managed.

Real-life examples of general partnerships

• Law firms: Rely on shared responsibility and close cooperation.
• Hair salons or local shops: Great for small-scale ventures with minimal investment.
• Consulting or accountancy firms: Effective for technical professions where collaboration is essential.

Comparison with other business structures

Unlike models like the Limited company (S.L.), where liability is limited to the capital invested, general partnerships expose members to higher risk. However, they are easier and quicker to establish — ideal for ventures with low initial investment needs.

If you want to understand the main types of business structures in Spain, check out our Complete guide to understanding the types of companies in Spain for a full overview.

Is a general partnership right for you?

This model is the best option for:

• Small local or family-run businesses
• Ventures based on trust between partners
• Companies that do not require large capital

For a deeper dive into all business structures and legal considerations in Spain, explore Legal and tax aspects of different companies in Spain.

However, it’s essential to weigh up the risks and evaluate whether your business needs align with this structure. A well-informed decision based on the pros and cons will help you choose what works best for your long-term success.