Main Purpose
For any business where a general partner manages the day-to-day activities while limited partners make an investment and collect a return with no personal liability.
Highly recommended for real estate investments.
Pros and Cons
A limited partnership has pros and cons that each partner should be aware of.
Pros
- Limited partners can only lose what they invest in the partnership, with no personal liability.
- Limited partners can leave the day-to-day operations to the general partner.
- Limited partners are not subject to self-employment taxes.
- No requirements for annual meetings.
- Ideal for businesses where there is limited work to do, such as real estate investment.
- Available in all 50 States.
Cons
- General partners assume all risk on behalf of the partnership.
- General partners can make most management decisions. Therefore, limited partners have little say in the day-to-day decisions.
- To sell ownership interest, limited partners often need the consent of the general partner and/or other partners.