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 must register with the state in which they reside, and they 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