Limited partnerships are partnerships that are formed by two or more persons who choose to operate the business as a limited partnership instead of as a general partnership.
Like corporations, they are formed by filing required documents with the state. A limited partnership must have one or more general partners and one or more limited partners. In a limited partnership, the general partner(s) make decisions and run the business while all limited partners (“silent partners”) do not take part in its operation. General partners are solely liable for the obligations and liabilities incurred by the business, allowing the limited partners to invest in the business without such liability. Protection of limited partners’ personal assets is one of the major reasons business owners choose a limited partnership. Limited partnerships enjoy the same pass through tax treatment as other partnerships.
Why Form a Limited Partnership?
Limited partnerships may be the answer for those who want pass-through tax status without personal liability (for limited partners only) without forming an LLC or S Corporation. Setting up limited partnerships can be expensive and should not be done without consulting with a specialist in this field.
MaxFilings can help you form your Limited Partnership.
Some Points to Consider When Forming a Limited Partnership