February 27, 2024

Definition of Limited Partnership (LP)?

A limited partnership (LP)—not to be confused with a limited liability partnership (LLP)—is a business owned by two or more parties.

These must include at least one general partner who runs the business and has unlimited liability for any debts. The limited partners have liability only up to the amount of their investment

The limited partnership business structure is often used as a vehicle for individuals who pool their money to invest in real estate or other assets.

Understanding Limited Partnerships (LPs)

A limited partnership is required to have at least one general partner and one or more limited partners

General partners have full management control of the business and also have unlimited financial liability for their financial obligations.

Limited partners have little or no involvement in management, but their liability is limited to the amount of their investment in the LP.

Hedge funds and real estate investment funds are often set up as LPs in order to protect their investors from the financial fallout of a failed venture.

In all forms of partnerships, each partner contributes resources such as property, money, skills, or labor, and in return shares in the business’ profits and losses. At least one partner makes decisions regarding the business’ day-to-day affairs

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