In a general partnership, how is liability for the debt of the company structured?

In a general partnership, each partner shares liability for the debts and obligations of the business. This means that each partner is personally liable for the full amount of the partnership's debts, regardless of their individual investment or ownership percentage. As such, the correct answer highlights that each partner is liable for the full amount and not just limited to what they have invested or a specific percentage.

While it might seem logical that liability would correspond to ownership percentage, this is not the case with general partnerships. Instead, the concept of joint and several liability applies, meaning that creditors can pursue any partner for the entire debt, and the partners can then seek contribution from each other. This means that all partners may be held accountable for business debts, making personal assets potentially at risk.

Partners share both profits and liabilities, which is a key characteristic of general partnerships, creating an environment where each partner must be vigilant about the financial conduct of the business and the actions of their co-partners.