Understanding a Partnership

I know each deal is different and greatly depends on the two parties involved but why would someone want to partner with someone besides for their need of additional cash funds?

Aside from the lack of cash funds, a partner with similar knowledge and experience (or at least similar mindset and business philosophy) could be a huge benefit for splitting the workload. If you have two top-level people working in the hostel with equivalent interest in the success of the business it works wonders for productivity, quality control, and continuity of service. Plus it would give each of the partners more opportunity to have a life outside of the hostel with the peace of mind that their investment is in good hands in their absence.

...are also jointly and severally liable for its depts. As in a sole proprietorship, the partners in a general partnership have unlimited liability for the indebtedness of the business...

I don't know for sure, but I think that means that if your partner runs up a debt and runs away then you're liable for it.

If you're looking at the legal side of things in the US, also check out:

• LLP -- Limited Liability Partnership: "In an LLP one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from that of a limited partnership."
• LLC -- Limited Liability Company: "a hybrid business entity having certain characteristics of both a corporation and a partnership. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation."

I believe an LLC helps protect your personal assets from being taken away if your business is sued or it can't pay its debts (but ask a lawyer :)).

Check out Nolo's books and articles:

• Nolo legal books
• LLC Basics
• Limited Partnerships and Limited Liability Partnerships