Limited Partnership (LP)

A limited partnership (LP) is a type of partnership where one or more general partners manage the business and have unlimited liability for its debts, while one or more limited partners contribute capital to the partnership and have limited liability. Limited partnerships are often used to raise capital for businesses that are too risky for traditional investors.

The general partners in a limited partnership are responsible for managing the business and making all of the important decisions. They also have unlimited liability for the partnership's debts, which means that they can be held personally liable for any losses that the partnership incurs.

The limited partners in a limited partnership do not have any management responsibilities. They simply contribute capital to the partnership and share in the profits and losses. However, their liability is limited to the amount of capital that they contributed to the partnership.

Limited partnerships are often used to raise capital for businesses that are too risky for traditional investors. This is because limited partners can invest in a business without having to worry about being held personally liable for its debts.

There are two main types of limited partnerships: general partnerships and limited liability partnerships (LLPs). In a general partnership, all of the partners have unlimited liability for the partnership's debts. In an LLP, the limited partners have limited liability, but the general partners still have unlimited liability.

Limited partnerships can be a good way for businesses to raise capital and for investors to diversify their portfolios. However, it is important to understand the risks involved before investing in a limited partnership.