How does a limited partnership work?

Talk to a Business Law Attorney. What Is a Limited Partnership and How Does It Work? An LP is a business entity that consists of at least one general partner and one or more limited partners. Typically, the general partner is an experienced businessperson who provides both financial resources and daily management skills to the partnership.

What is a limited partnership (LP)?

A limited partnership (LP) is a business entity that requires at least one general partner and one or more limited partners. The general partner has unlimited financial liability, while other partners have liability up to the size of their investment. LPs are pass-through entities that have few or no reporting requirements.

How many types of partners are there in a limited partnership?

Limited partnerships have two kinds of partners: general and limited partners. General partners are exposed to personal liability, but manage the business on a daily basis. Limited partners invest money in the business and are shielded from personal liability beyond the amount of their investments.