Limited partnerships in the US consist of at least one general
partner and one or more limited partners. Limited partners, unlike general partners, do not have the right
to participate in management
decisions, and have only limited liabilities for the firm's obligations
. The formation of the limited partnership is similar to that of the general partnership
. Differing from the general partnership, though, is the fact that the law recognizes a limited partnership as separate
legal entity from the partners themselves.
- The major benefit of this type of structure is the limited liabilities of limited partners. In exchange for giving up management rights, limited partners can lose no more than the amount they invested into the firm.
- The process to form a limited partnership is more complex than that of a general partnership. The procedures are similar to the formation of a corporation.
- An organization fee is required for this type of partnership.
- Furthermore, limited liability cannot be extended to all partners. General partners still have unlimited liability.
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