Do you operate a business with another partner or significant? Does your business need capital commitments and time that is too big for you to handle yourself? Limited partnerships can be an ideal legal entity for you to use to operate your business.
The partnership is only a legal entity owned by two or more people or entities. There are three kinds of partnerships:
General Partnership (GP) – This is a type of partnership discussed by most mother-and-pop entrepreneurs when they say they operate as a “partnership”.
Limited Liability Partnership (LLP) – This is a limited legal entity to professionals such as lawyers and lawyers, which are required by state law to use this type of legal entity; This does not apply to most entrepreneurs, so we will not talk here.
Limited partnership (LP) – consists of at least 1 general partner and one or more limited partners.
Partnerships can provide valuable tools to bring additional parties to manage or finance your business activities. On the other hand, all partnerships have different losses: the action of one pair can involve the other. Individual partners can be “together and very responsible” for other partner actions, whether they know it or allow them or not. This is why you should not form a partnership with anyone you don’t know well or believe to manage your business competently.
No matter how well you know or trust your partner, you should never, once have a general partnership. In fact, you may not personally be a common partner in any partnership. General partners have the power of decision making in partnership, but the price of strength is exorbitant. General Partners are personally responsible / responsible for all partnerships and their partners, whether the general pair ratifies the action or not.
This is why maternal and pop general partners are even more dangerous than single ownership, from the perspective of asset protection. Because each of you is personally responsible for partnerships and other parties, you stand up to lose your personal assets if the lawsuit is brought against you and your business assets cannot fulfill the verdict. It looks like you share the responsibility of running your business, but in reality you are fully responsible not only for what you do, but for what your partner does. If Mike encourages the company’s car that you have said to him too dangerous to use for business and an accident, the victim’s lawyer is too excited about in court, so * You * and Mike together responsible for $ 1.5 personally and individually . million assessments given by the court. Your savings, your personal car, even your home may be confiscated to fulfill this assessment.
Limited partnerships must have one general partner and at least one limited partner. Limited partners have a “limited liability” – and may not participate in entity decision making or file documents, sign contracts or manage their business. General partners are responsible for all limited partnerships. Therefore, you never want to be a common partner in your limited partnership.
Small creativity can solve this problem. Because partnerships can consist of two or more people or entities, a limited company or company (LLC) can be a common partner. Because this entity by definition has limited obligations, your general partner accountability will be limited to the company’s assets or LLC (which can have assets at all).