What is a limited partnership? When is it formed? How do you form one?
Our goal is to help you understand those questions in this article.
What’s a limited partnership?
This is a partnership in which there are two partnership types – general partners, and limited partners. General partners are managing the business, and are responsible for the debts of the business. Limited partners have limited liability for business debt, and obligations. They don’t actively manage the business.
When you start a business, your choice of business entity is very important. This is one of the most important decisions you can make. If you have MANY partners, this can be a very complicated decision. The limited partnership status is recognized in all 50 states. This is a variation of a regular partnership.
After the creation of the limited liability company, LLC, limited partnerships have declined in terms of their popularity. Some types of businesses, like real estate companies, family owned businesses, can benefit from a limited liability.
Keep reading to learn more about limited partnerships, how they work, how to compare them to other types of partnerships, and how to form one in your own state. We’ll also discuss how to evaluate pros and cons of limited partnerships.
How Limited Partnerships Work?