What Is A Limited Partnership?
A limited partnership is just another type of partnership. It is different from a general partnership because it has both general partners and limited partners. A limited partnership is also considered a distinct entity from its partners.
The general partners deal with the day-to-day operations of the partnership; they are liable for debts and actions of the partnership. Limited partners usually do not participate in day-to-day operations of the partnership; they bear no liability for debts or actions of the partnership. In essence, limited partners are more like investors rather than partners.
What Are The Benefits Of A Limited Partnership?
Here are three benefits of limited partnerships:
- For general partners, they can run the business but still have the flexibility to bring in investors as “limited partners” who do not interfere with the day-to-day management. This may be a better alternative for injecting capital into the business than borrowing.
- The partnership does not have to be dissolved to replace limited partners.
- For a limited partner, liability is limited to the capital that the partner has invested. In contrast, a general partner is personally liable for all business debts or claims.
How Do I Create A Limited Partnership?
It is best to have a limited partnership agreement, which spells out details of the partnership. You'll also need to register your LP with the state. Labor and employment attorney, Adair M. Buckner, can help guide you through these steps.
To set up a free initial consultation*, contact Adair M. Buckner today.
*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)