In business registration terminology, a major vast of people imply General Partnership when they use the term “partnership”. However, in business world, another form of partnership exists, which is called Limited Partnership. In short, a general partnership applicable when both partners have administrative, management and operation control on the business. On the other hand, a when the partnership business is operated, administered and managed by only the single partner and the other partner has no administrative, management or operational control (except contributing capital only), a limited partnership comes into place.

Limited Partnership

Four major characteristics distinguish a limited partnership from a general partnership:
  1. A limited partnership is operated by a single “general partner” with unlimited liability, supported by other “limited partners.”
  2. The “limited partners” contribute capital but cannot be involved in the company’s management, administration or decision making.
  3. The single “general partner” gets a bigger share of the earnings in exchange for increased contributions and risk.
  4. The liability of the limited partners is capped in proportion with the capital contribution