Limited Partnership

/Limited Partnership
Limited Partnership2018-07-30T17:09:42+00:00

The most glaring difference between a “limited partnership” and a general or limited liability partnership is that responsibility and liability of the business are not shared equally among co-owners.

Ever heard the term “silent partner”?  This term refers to the limited partner(s) of a business—one who invests in and may profit from the business, but is not liable for any losses beyond his or her original investment.

The general partner, however, has the liberty to make management decisions, but is also personally liable for all losses.  Perhaps due to its imbalanced nature, the limited partnership model accounts for less than 1% of all partnerships in the UK.
One way to minimize personal liability is to form a limited partnership between an incorporated company as the general partner and an individual as the limited (silent) partner.  Liability for corporations rests with shareholders; therefore, no individual partner is at risk for the entirety of any losses incurred.  Judgment creditors seeking remuneration may only collect based on the shares of that company’s limited liability partners.