Limited Partnerships

A limited partnership is similar to a general partnership with one key difference. ┬áThe limited partners do not share in the liability of the general partners. ┬áIn a limited partnership, two or more people will enjoy the profits of the business. ┬áThe general partner will be personally liable for all of the debts of the business. ┬áThe limited partner will be entitled to a certain amount of the profits of the business. ┬áThe limited partner’s liability is limited because the limited partner cannot be responsible for losses in excess of the limited partner’s financial interest in the business. ┬áThis form of business has an annual filing requirement and must pay more in state taxes and fees than a general partnership. ┬áIt has the benefit of allowing the general partner to raise more capital because the general partner can offer the limited partners the guarantee of the limited liability. ┬áUsually the limited partner is an “investor” in the business who is providing funds but will not be too involved in the day-to-day management of the business.

 

This information is provided to you so that you might understand the basics of the most common business structures available in Tennessee.  The choice of a business structure is affected by many variables.  The information provided on this webpage is not intended to operate as an exclusive source of information.  Please contact us for assistance in determining what structure might work best in your particular case.

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