What is a LP
What is a LP?

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What is a LP?

A Limited Partnership (LP) is a special type of Partnership created by state statute. A Limited Partnership consists of two classes of Partners: one or more Limited Partners and one or more General Partners.

A Limited Partnership is a common business structure for types of businesses that focus on a single or limited-term project. Limited Partnerships are also useful in situations where one or more financial backers prefer to contribute money or resources while the other Partners perform the actual work.

In a Limited Partnership only one Partner is required to be a General Partner. A General Partner shares characteristics similar to those of a Partner in a General Partnership, including individual liability for the acts of the Partnership or of any member of the Partnership engaged in carrying out Partnership business.

General Partners pay the Limited Partners a return on their investment - similar to a corporate dividend. The nature of the payment is usually defined in the Partnership Agreement. A General Partner is exposed to unlimited personal liability. It is for this reason that Limited Partnerships are sometimes set up so that the General Partner is a Corporation or an LLC.

A Limited Partner is similar to a shareholder in a Corporation or a member in a LLC, except that the Limited Partners have no inherent right to elect a board of directors. Limited Partners have no day-to-day involvement in the management or operation of the Partnership and are not generally liable for either the acts of the Partnership or of the General Partners. A Limited Partner does have certain rights to participate in certain limited decisions, such as the decision to liquidate and dissolve the Partnership. A Limited Partner's liability is normally limited to the amount of his or her investment in the Partnership.

Under state law, and in the absence of any special provision to the contrary in the Partnership Agreement, a Limited Partnership cannot be dissolved without the unanimous consent of all of the Partners.

Income from a Limited Partnership can be allocated each year among the Partners in a way that minimizes taxes. If the Limited Partnership meets certain criteria it can enjoy the benefits of pass-through taxation; otherwise it will be taxed as a Corporation.

Limited Partnerships are required to file the names and addresses of all General Partners with a state agency, usually the Secretary of State. A Limited Partnership may not have a name which is too similar to another Limited Partnership or Corporation operating in the same state.
CORPORATE GLOSSARY
 
Administrative Dissolution
Agent for Service of Process
Apostille
Apportionment
Articles of Incorporation
Articles of Organization
Assumed Name
At Will LLC
Authorized Shares
B Corporation
Benefit Corporation
Board of Directors
Business Dissolution
Business Entity
Bylaws
Certificate of Existence
Certificate of Status
Certified Copy
Close Corporation
Common Stock
Conversion
Corporate Bylaws
Corporate Name Reservation
Corporate Stock
DBA
Disregarded Entity
Dividends
ESOP
Excise Tax
Federal Tax ID
Ficticious Name
Foreign Qualification
Franchise Tax
General Partnership
Good Standing Certificate
Incorporator
Involuntary Dissolution
IRS Form 966
ITIN
Limited Liability Company
Limited Partnership
Liquidation
LLC
LP
Majority Shareholder
Meetings
Merger
Nexus
Non-Stock Corporation
Nonprofit Corporation
Obligated Member LLC
Organizer
Paid-in Capital
Paid-in Surplus
Par Value
Personal Service Corporation
Preferred Stock
Privilege Tax
Professional Corporation
Professional Service
Proxy
Registered Agent
Registered Office
Reporting Requirements
Revocation
S Corporation
Series LLC
Service Mark
Shareholder
Sole Proprietor
Stated Capital
Statutory Agent
Stock Certificate
Term LLC
Trade Name
Trademark
Trust
Trustee
Winding Up
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