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Limited Partnership Advantages and DisadvantagesWhen applied to specific business scenarios, limited partnerships have a number of benefits and drawbacks that all prospective parties should consider. While the largest advantage of a limited partnership for limited partners is limited personal liability for the debts of the business, one main disadvantage for limited partners is that they may lose their investments in the business if it does not succeed. Before making a final decision about their exact role in a business partnership, prospective partners should carefully weigh the following limited partnership advantages and disadvantages:Advantages of Limited PartnershipDisadvantages of Limited PartnershipLimited partners are only responsible for (up to) the amount of money that was invested into the business.Limited partners must follow specific and strict rules in regards to their involvement in the business, otherwise risk losing their limited liability and investments.Limited partners have protected investments, meaning that they cannot lose more money than they contributed to the project.Limited partnership are typically only used in short-term projects and special situations, meaning that they do not function the best for a true, full-time business in all scenarios.Limited partners can still earn as much money off of a business as a general partner because all partners share both expenses and profits.Limited partners do not directly participate in everyday operations and therefore cannot be held fully liable, unless they begin to take an active role in general responsibilities.General partners can use their expertise in a subject or field to run a business while limited partners solely contribute funds to make the business possible.Limited partnerships require more strict filing formalities since more people are generally involved, though not all co-owners are responsible for everyday operations.Limited partnerships are usually only taxed once because they are legally considered a pass-through entity. Limited partners do not need to file a self-employment tax.Ownership can be more difficult to transfer between partners, should something happen to a general partner.Limited partnerships support a less formal business structure.Limited partnerships are not as flexible as general partnerships in terms of changing or assigning different management roles.