A general partnership is a type of business arrangement that involves two or more owners who are each held responsible for both the liabilities and the assets of the business. This type of arrangement is known as a pass-through entity, meaning that any profits or losses incurred by the business will pass through to each partner, who will then report them on their personal tax returns.

General partnerships are one of the simplest ways to structure a business and the most cost effective when compared to corporations. Each partner will have equal control over the decisions and operations of the business, and will manage the business to maximize profits for all partners.

When setting up a general partnership, it's important that all partners enter into a written agreement. The document should cover the initial agreement, the partners' rights and obligations, the business purpose, and how profits or losses will be divided up. It should also outline the partners’ authority in regards to managing the business and making any important decisions.

It's also important to note that all partners in a general partnership have unlimited liability. This means that if the partnership becomes insolvent, each partner is personally responsible for all of the debt it incurs and their personal assets may be subject to seizure. This can create a lot of financial risk for all partners involved.

Overall, the formation of a general partnership can be an effective way of doing business, provided all partners are committed to the venture, understand their rights and obligations, and are aware of their individual liabilities. A written partnership agreement should always be put in place to ensure all partners’ interests are protected.