Like a general partnership, a limited partnership is available if you are going to own or operate a business for profit with more than one person. A limited partnership has two types of partners: general partners and limited partners. The purpose of a limited partnership is to encourage investors (the- limited partners) to invest in the business without exposing them to personal liability.

a. Formation. A limited partnership is formed by an oral or written partnership agreement, but a written partnership agreement is always advisable.

b. Responsibility. The responsibilities of the general and limited partners are different. The general partners manage the partnership business and are personally liable for partnership debts. The limited partners, also called passive investors, contribute money but are not involved in running the business. The limited partners usually are not responsible for the debts of the partnership beyond the amount of money they contributed. This means that the limited partners have limited liability.

c. Profits and Losses. Partnership profits and losses are shared in proportion to the partners' contributions, unless the partnership agreement provides otherwise.

Limited Partnership is a special form of partnership where a partner invests money and does not participate in the daily operation of the business.  This partner is only liable for the amount of money that he/she invested and no more.

For Your Information

What are the various Business structures you ask?

1. Sole proprietorship - 

2. Partnership -