Okay, what are the types of partnership? Okay, there are several classifications of partnerships or forms of partnership. The first is the general partnership and that’s the most commonly understood the general partnership is it doesn’t it isn’t necessarily required to be filed anywhere it is where the partners to the business activity commercial activity generally share equal in equally in responsibilities.
In rights as far as management decision-making, etc. in the partnership now through a partnership agreement. You can limit the type of activities that one partner can undertake versus another partner, but generally the court structure to the partnership defaults to equal ownership equal distribution of profits or losses equal decision-making authority etcetera. So that’s the general Then again, not necessarily filed with the state but in some situations it can be okay. So that’s the general partnership
A specialty entity type that has to be filed with the state is the limited partnership. Now, the purpose of the limited partnership is to allow for partners who don’t want to take part in the business, but provide some level of either advice to the business financing to the business. Capital contribution through equipment funds, etc. to the commercial activity, but they want to maintain a level of separation. They don’t take part in the day-to-day operations of the commercial activity and thereby that limited partner status allows them to avoid personal liability for any contractor tort damages that arise it from the partnership activity so safe.
Example John is a general partner. And Jane is a limited partner. Well, if John undertakes activity that causes liability for the partnership, so he’s driving the company vehicle and accidentally hit somebody and they sue the company in tort. Well, Jane has invested capital of some sort into the business. Let’s say $10,000.
Well if the companies held liable Jane stands to lose any money that she put into the corporation her the extent of whatever capital or Equity that she’s put in but she is not personally liable beyond that contribution to the partnership for any investments into the business where the general partner like all General Partners is subject to personal liability there for the business activity. So again, yes, that’s the role of the limited partnership.
Limited Liability Partnership
Limited liability partnership or the LLP. In most states, this entity status is reserved for certain professional practitioners of that provide professional services such as doctors dentist accountants attorneys Engineers architects in some cases etc. that they carry on activity collectively but because there is our requirements generally for liability insurance for their professional malpractice and things of that nature that it is like the state wants to allow them to operate as partners, but to limit the potential personal liability of each partner from the others.
Limited Liability Limited Partnership
So it is an option for these professional practitioners to choose the limited liability partnership instead of say the limited liability company or the corporation and it provides The protections that the general partnership or limited partnership don’t for the active partners in the business. Again, this type of entity has to be filed with the state and generally it has to be stated to be a certain type of professional practice to qualify. But if you meet those requirements again, it’s as a valid form of entity to carry on businesses.