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Limited Partnership
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Limited Partnership
A limited partnership is a business
organization created under state law that allows some members of a partnership
to enjoy the benefit of limited liability.
Limited partnerships must
contain at least one general partner and at least one limited partner. The
general partners are tasked with the operation of the business and they are saddled
with unlimited liability; which means that they are personally liable for debts
of the partnership.
Limited partners, on the other
hand, may not take active roles in running the partnership but they gain the
benefit of limited liability; which means that they are not personally liable.
The most they can lose is the amount that they put into the business.
The limited partnership was
designed to combine the limited liability benefits of the corporation with the
avoidance of double taxation common to the general partnership. Today, in many
cases, the limited partnership has been superseded by the LLC, which has the
same essential benefits without requiring any members to have unlimited
liability.