When it’s time for investors, a limited partnership may be right for you
Bring in limited partners who invest but are shielded from personal liability.
Designate general partners who manage the business.
What is a Limited Partnership ?
Limited Partnership (LP) is one of the partnerships in which at least one person act as “General Partner” and at least one person holds the position of “Limited Partners” among all the partners. In such partnership, General partner has all the management authority and personal liability while the LP act as a passive investor with no management authority.
Limited partnership offers many advantages, one of the advantages of a Limited partnership is that it makes it easier to attract investors since the only liability for limited partners is the capital they invest in the business. It also includes personal asset protection (for limited partners) and pass through taxation. For forming a LP you will need to file certificate of limited partnership with the appropriate state agency (usually the secretary of the state)
Before going for a LP, one should create a limited partnership agreement which spells out the details of the partnership. Impanix will help you to form LP online and the process will be easy, affordable and not time consuming.
Advantages of Limited Partnership
- Include long-term rents for passive investors.
- For the limited partners, there will be personal asset protection.
- General partner have complete control of the entity and its assets
- Without dissolving a partnership, a LP can be replaced or leave.
Disadvantages of Limited Partnership
- For such partnership, the liability of partners for debts of the business is unlimited.
- In LP, each partner is “jointly and severally” liable for the partnership’s debts which means each partner is liable for their state of the partnership debts as well as being for all the debts