General partnerships have many benefits, but perhaps the most compelling is the ease with which they can be set up and maintained. You do not have to register with your state and pay fees, as you do to establish a corporation or limited liability company (LLC). And because a general partnership is normally a "pass through" tax entity -- meaning the partners, and not the partnership, are taxed -- filing income tax returns is relatively easy. Unlike a regular corporation, there is no need to file separate tax returns for the corporate entity and its owners.

Another advantage of general partnerships is the flexibility they offer. In partnership agreements, the partners are free to set their responsibilities and benefits as they see fit or as the needs of the business dictate. The structure of the organization and the distribution of profits and losses are much more flexible in a general partnership than they are in a corporation. Because of this, an individual partner can be rewarded with higher profits for taking on more financial risk. Typically, corporations distribute dividends evenly according to the percentages of stock held by each stockholder.