What differentiates one kind of partnership from another is usually how much liability is shared between owners. General partnerships share equal rights, profits, and liability; that means each partner can be held responsible for the company’s debts and lawsuits. However, it does have some tax advantages.
A limited partnership, as the name suggests, limits the amount of liability each partner has in the business. One partner in a limited partnership must be a general partner, thereby assuming both the management responsibilities and the legal liability. The limited partners are generally investors who receive some profits but aren’t involved in the running of the business.
A limited liability partnership (LLP) protects both partners from liability and can be the best of both worlds for partners wanting to protect their personal assets from being associated with the company’s debts and obligations. A business law attorney can advise you on the best path for you and your partners and can convert an existing partnership into an LLP.