Limited Partnership
Limited Partnership

Limited Partnership Definition

A limited partnership is a private or public business owned by two or more partners, including both general partners and limited partners.
In this type of partnership, the partners share the profits and losses of the business as stipulated in a predetermined agreement. The general partners share the management and control of the business. In comparison, limited partners do not participate in management or control of the business.
In a limited partnership, only the general partners have unlimited liability for the obligations of the business. This is because the limited partners are only liable up to the amount of their original investment. This means if the partnership defaults on loan payments, then the personal assets of the general partners can be liquidated to repay the debt, but the limited partners only risk losing their original invested capital.
Consider a limited partnership private if it has less than 35 limited partners. Furthermore, private limited partnerships do not have to register with the SEC. But consider it public if it has more than 35 limited partners. As a result, public limited partnerships must register with the SEC. One can trade the ownership through brokers and dealers, but they cannot trade on public securities exchanges.

General Partner Definition

In any type of partnership – a general partnership, a private limited partnership, or a public limited partnership – a general partner is an individual who is responsible for the operations of the partnership and has unlimited liability for the obligations of the business.

Limited Partner Definition

In comparison, a limited partner is an investor whose liability is limited by the amount of capital they invested. If the partnership defaults on loans, then a limited partner cannot lose more than what he originally invested. Limited partners typically are not involved in the daily operations of the business.

General Partnership vs. Limited Partnership

In a general partnership, all of the co-owners are general partners with unlimited liability for the obligations of the business. In a limited partnership, there is at least one limited partner. That limited partner is an investor whose liability is limited by the amount of capital invested by that individual. In comparison, general partnerships are always privately owned. These partnerships can be privately or publicly owned.
If you want to learn more financial leadership skills, then download the free 7 Habits of Highly Effective CFOs.
Limited Partnership

[box]Strategic CFO Lab Member Extra
Access your Flash Report Execution Plan in SCFO Lab.
Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]

Limited Partnership
See Also:
Organizational Structure
Sole Proprietorship
S Corporation
Make-or-Buy Business Decision
Company Life Cycle

ARTICLES YOU MIGHT LIKE

IN CRISIS? GET A STRATEGIC CFO! – CEO Blindspots Podcast

Friend of the firm, Birgit Kamps, recently had Strategic CFO President, Dan Corredor, as a guest on her podcast, CEO Blindspots. CEO BLINDSPOTS HOST: Birgit Kamps. She was speaking five languages by the age of 10, and lived in five countries with her Dutch parents prior to becoming an American citizen. Birgit’s professional experience includes starting

Read More »

SHRM calls ICHRA the 401K for Group Health Benefits

Fed-up with group health insurance? ICHRA is the new way to offer great health benefits and avoid ACA penalties, SHRM calls it the 401K for group health benefits.  In 2020 the Department of Labor, HHS and IRS changed the rules for employer health benefits. They changed the Affordable Care Act mandates and penalties for every

Read More »

How to Improve Your Resume

The concept of resumes might seem difficult to grasp at times. After all, you’re set with the task of conveying all of your life’s accomplishments and skills in a single sheet of paper. Creating a good resume is an essential skill necessary to be successful in the workforce. A good resume can be the difference between getting your dream job or

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

THE ART OF THE CFO®

Financial Leadership Workshop

Days
Hours
Min

September 12-15th 2022

Days
Hours
Min
SHARE THIS ARTICLE

JOIN THE NEXT STRATEGIC CFO™ WORKSHOP SERIES

Strategic CFO™ Financial Leadership Workshop
The Art Of The CFO®

Days
Hours
Min

February 27 - March 2, 2023

Skip to content