South Dakota Agricultural Law - What is a "General Partnership"?

Today, farms are more complex than ever, and as they continue to grow, many farmers are considering their options for organizing the farm into a structure that best fits their farm's needs. Choosing to organize a business using a different type of entity can be a difficult decision, as each type of entity has its advantages and disadvantages while individual farmers also have a wide variety of goals and objectives that are most important to them and their particular operation.

A "General Partnership" is created when two or more individuals conduct and hold themselves our as a business. Once a partnership is established, partners to the business share equally in the profits, as well as losses and liabilities. Generally, each partner is liable for the other partner's business decisions and liabilities related to the business. For example, if one partner incurs a large debt within the scope of the business, the other partners could also be responsible. While a "General Partnership" can be useful in bringing farmers with mutual interests together, it also presents a potential financial and liability risk.