In most states, a Limited Partnership is basically governed by The Revised Uniform Limited Partnership Act (RULPA). This type of entity involves at least one general partner (GP) and one limited partner (LP). Some of the highlights of a Limited Partnership are:
-GPs have total control and centralized management
-Ability to transfer LP interests
-Pass-through taxation for partners
-Limited liability for limited partners
Unlike in a general partnership where no necessary filing might be required, a limited partnership requires you to file the necessary partnership documents at the Secretary of State’s Office. You’ll have to properly present a written limited partnership agreement and indicate your partnership status after the name of your business with the term “limited partnership”, or “L.P.”, “Ltd.”
As a limited partner, you’ll enjoy limited liability but will have no control over your investment. Alternatively, if you are a general partner, you can purchase limited partnership interests and have a little bit of both general and limited partnership.
In the following post, I’ll explain in detail when is it that a limited partner can lose his limited partnership status. In addition, I’ll cover the rights and responsibilities of the limited and general partners and how their profits and losses are properly allocated.
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