Similar to a general partnership but some of the partners have the benefit for limited liability. At least one partner must be a general partner for a limited liability partnership to exist.

 

Key Highlights

• More than one owner.

• Unlimited personal liability for all general partners.

• Limited liability for limited partners.

• All income, losses, assets, and liabilities are shared among the owners.

 

Formation

• Legal documents must be filed with the state.

• Governed by the Revised Uniform Partnership Act.

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Operations

• General partners run the day-to-day operations of the business.

• Limited partners forfeit their rights to have a say in the management of the business. If a limited partner participates in the management of the business then they will lose their limited liability protection.

• Partners share income and losses per partnership agreement.

 

Termination

• Departure of a limited partner does not cause the termination of the partnership.

• Departure of a general partner may lead to the termination of the partnership if there is only one general partner.

• The owners chooses not to continue with the business.

• Partnership agreement will spell the out terms of termination. If there is no such wording in the partnership agreement or the partnership agreement doesn’t exist then Revised Uniform Partnership Act (RUPA) will govern the termination.