Any business that has at least two owners can be a partnership. However, from a legal perspective, forming a partnership involves making key decisions early on about what kind of business you want to be. The key question you have to answer is which of the four types of partnerships is right for you.

Limited partnership (“LP”) is nothing more than a specific variation. The key difference between an LP and a general partnership (“GP”) is the concept of “limited partners” versus “general partners”. In an LP, the general partners are the ones with everything on the line. They make the business decisions, but they are also exposed to personal liability for financial and legal obligations of the business. Limited partners on the other hand do not share in these risks. This can be a big bonus for the business because it can help lure passive investors to contribute.

However, even an LP carries some similar drawbacks as a GP. If gridlock develops between the general partners or a general partner passes away, the LP is still terminated. Again, transfers of ownership are also not permitted.

At Garrett, Walker & Aycoth, we can walk you through the benefits and risks of establishing your business as a limited partnership. Our attorneys have the knowledge and skill required to help you determine whether a LP is best option for you and to advise you on how to avoid common pitfalls associated with such a partnership type. Call us today at (336) 379-0539 or contact us to schedule an in-depth consultation.