Limited Partnerships and Limited Liability Partnerships
A limited partnership (LP) differs from an LLC in that it must have a minimum of two members: at least one general partner and at least one limited partner. General partners control the day-to-day operations of the business and are personally liable for the business debts. Limited partners are passive investors, who enjoy limited liability but cannot actively participate in business decisions. General partners are often LLCs or corporations to protect their owners from personal liability.
Limited partnerships are governed in most states today by the provisions of the Revised Uniform Limited Partnership Act (RULPA) and a Partnership Agreement. Historically, RULPA has set the organizational guidelines for limited partnerships and defined the rights and liabilities of its partners. Under RULPA, an LP must register with the state authority, usually the Secretary of State, and it may be required to file annual reports. Limited partners must keep to their passive role, or they run the risk of being held personally liable for the business. Limited partners may withdraw from the partnership on six months’ notice, unless the partnership agreement specifies otherwise. The duration of the partnership is required to be specified in the agreement.
Limited partnerships may be public or private. Publ