Limited Partnership

1. Advantages, Implications, and Constraints of Limited Partnerships.

A. General partner has personal liability

There must at least one general partner in a limited partnership, and that general partner has full personal liability for all partnership debts. The general partner also has most management rights.

B. Unanimous consent required to sell

Like partners in other partnerships, neither a general partenr nor a limited partner can sell the right to be a partner in the limited partnership without the unanimous consent of the other partners. However, a limited partner may sell or assign his partnership interest (share of profits) without the consent of the other partners.

C. Choice as a business entity

This form of business entity offers limited liability to most investors, centralized management, and the flow-through tax advantages of a partnership, without the limitation on number of investors that an S corporation has. Its disadvantage, however, is that at last one person must be personally liable for the debts of the business.