Partnership Debt

Partnership debt is the responsibility of a partner for the debts incurred by the partnership - a partnership; being a business entity owned by two or more people.

How do you avoid partnership debt? Your risk management techniques to have control over the ongoing operation is important. You cannot limit certain debts unless you have incorporated the business. Even then there are debts for employee wages, taxes and management/fiduciary liability that cannot be completely blocked.

If a decision is made that is poorly conceived then the resulting loss and/or debt becomes the responsibility of all the partners of the business.

Discuss your options for the formation and revision of your business structure with your lawyer and accountant. Your agent or broker can advise you about different types of insurance you can purchase for the business including commercial general liability, director and officer's, errors and omissions, surety and management liability.