A limited partnership is made up of two types of partners; general partner and limited partner. The general partner controls the business and makes all the decisions while a limited partner just invests money in the business. The profits will be shared between partners but losses and debts acquired by the business will be the responsibility of the general partner. The limited partner only risks loosing the amount he/she already put into the business. This form of business ownership can be useful if you want to keep control of your small business but need extra funds. However it also comes with a lot of complicated paperwork. Many entrepreneurs prefer other small business structures when starting a small business because this form of ownership can be quite complicated to set up.
- Limited Liability for the limited partner
- General Partner has all the control
- Can have unlimited number of owners (however if you have many limited partners it may be better to form a corporation since it offers more flexibility)
- General partner will be responsible for debts and obligations
- Need to be in compliance with security laws
- alot of paperwork to set up