A partnership manager, also called a general manager or general partner, handles the day-to-day affairs of the business. General and limited partnerships designate one or more partners to act as general managers, so the outside world knows who has the authority to speak for the company and determine how it should operate. If a partner is not a general partner, he is a limited partner.
The choice to form a business as a certain type of business entity determines whether the owners may personally be held liable for business obligations and the way they pay their taxes. Partnerships can be formed to operate a business whenever two or more people come together and agree to act in concert. There are various types of partnerships, but the most basic are general and limited partnerships.
In a general partnership, all partners are equal. They share equally in the management of the business and in its profits and losses. Each partner is considered a partnership manager, or general manager, which means that he has the authority to bind the business, without needing permission from other partners. In other words, each partnership manager can represent the entire partnership.
One of the significant drawbacks of the general partnership entity form is that each partner may be personally held responsible for the business obligations of the partnership. In fact, the label “general partner” or “general manager” tells a creditor that the partner's personal assets are fair game when collecting a debt. Basically, there is no separation between a manager's business affairs and personal affairs.
Limited partnerships have partners that are not involved in the daily management of the business. These limited partners are only liable for business obligations to the extent of their investment in the business. Their interest in the partnership is considered passive, as if it were an investment in a corporation's stock. A limited partnership must have a least one partnership manager to run the business. Only the general partners are personally liable for the obligations of the business.
The partnership manager is also the point person for income tax purposes. When the partnership registers with a tax agency, it must designate one person to be the contact and receive tax correspondence from the government. This person must be a general manager, not a limited partner. A partnership manager is also the person who is responsible for preparing the partnership tax returns, keeping track of ownership interests, and providing documentation of the distribution of profits and losses.