Question

What is the difference between a general partnership and a limited partnership. What types of professional companies are organized as Llp’s and why

Answer 1

The most important difference between general partnerships and limited partnerships is the issue of limited liability. General partners always face the risk of losing their personal assets in the event that the business goes into bankruptcy or is assessed with a large judgment. Limited partners face no such impediment. The extent of a limited partner'sliability is the investment. In the event of a business bankruptcy or civil judgment, the most that the limited partner can lose is the amount of money invested in the business.

The LLP legal form of business organization is frequently used by early-stage start-up companies as they require capital and want to limit the liability of the partners to the extent of their contributed capital.