LIMITED PARTNERSHIP Meaning and
Definition
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A limited partnership is a business entity formed by two or more individuals or entities known as partners. In this type of partnership, there are two types of partners: general partners and limited partners. A limited partnership is established through a legal agreement called a partnership agreement.
General partners have the authority to manage and operate the business on a day-to-day basis. They are responsible for making business decisions and bear full personal liability for the partnership's obligations. On the other hand, limited partners are typically investors who do not actively participate in the management of the business. They enjoy limited liability, meaning their liability is restricted to the amount of their investment.
Limited partnerships are commonly used when a business venture requires investment from outside parties who do not wish to actively participate in the operation and management of the venture. The limited partners provide the necessary capital while the general partners provide the expertise and assume the operational responsibility.
Limited partnerships are subject to state-specific laws and regulations, which govern their formation and operation. They often have a limited life span, depending on the agreed-upon duration in the partnership agreement or when certain events occur, such as the withdrawal or death of a general partner. Dissolution of a limited partnership typically requires a formal process, including winding up affairs and settling financial obligations.
Overall, limited partnerships provide a flexible business structure that allows for a separation of management control and investment, empowering individuals or entities to collaborate while mitigating risk and liability.
Common Misspellings for LIMITED PARTNERSHIP
- kimited partnership
- pimited partnership
- oimited partnership
- lumited partnership
- ljmited partnership
- lkmited partnership
- lomited partnership
- l9mited partnership
- l8mited partnership
- linited partnership
- likited partnership
- lijited partnership
- limuted partnership
- limjted partnership
- limkted partnership
- limoted partnership
- lim9ted partnership
- lim8ted partnership
- limired partnership
- limifed partnership
Etymology of LIMITED PARTNERSHIP
The word "limited" in the term "limited partnership" signifies the limited liability of certain partners in the partnership, whereas the word "partnership" refers to the business structure where two or more individuals come together to conduct business operations.
The origin of the term "limited partnership" can be traced back to the mid-19th century. It gained popularity alongside the rise of modern business organizations and trade expansion during the Industrial Revolution. Limited partnerships were developed as a legal structure to accommodate investors who wanted to contribute capital to a business venture without incurring unlimited personal liability.
The concept was initially derived from the English partnership law, which had separate categories for general partners and limited partners. However, the usage of the term "limited partnership" in the modern sense originated in the United States. It became a legally recognized business structure provided by various states' statutes, allowing for the formation of partnerships with limited liability.
