Understanding Limited Partnership Definition: A Los Angeles Perspective
The term “limited partnership” is often associated with business and investment3 min read
The term “limited partnership” is often associated with business and investment. But beyond the basic definition of a limited partnership, there is much more to understand about what it means both for Los Angeles businesses as well as the duties and obligations that come with being a limited partner. Below, we'll explore the intricacies of limited partnership definition from a Los Angeles perspective and discuss some of the frequently asked questions that arise with this type of business structure.
What is a Limited Partnership?
In Los Angeles, a limited partnership is a business arrangement between two or more people. One of the members, the general partner, takes on the managerial role and assumes full responsibility for the business’s obligations. The other partner, or partners, are known as limited partners and invest either money or expertise, or both, but they are not liable for any losses the business might take. Instead, the liability for debts and other matters rests solely with the general partner. It is also important to note that, with limited partnerships, the general partner is not bound by the usual fiduciary duties to the limited partner(s) as is the case with general partnerships.
Why Choose a Limited Partnership?
For businesses in Los Angeles, the biggest draw of forming a limited partnership is that it does not require the filing of any paperwork with the state. Instead, the limited partnership is simply established by an agreement that the partners have drafted and signed. In addition, limited partnerships offer the benefit of avoiding double taxation, meaning that the profits that are made by the partnership are not subject to taxation; instead, the individual partners pay taxes from the income that they receive, as opposed to the business itself.
What Are the Legal Responsibilities of a Limited Partner?
As a limited partner, one of the most important responsibilities is to ensure that all provisions of the partnership agreement are followed. Similarly, it is the responsibility of the limited partner to ensure that all state and federal legal requirements, such as paying taxes, are met. In addition, limited partners may be given certain voting or decision-making rights regarding the business, although this is something that is determined by the agreement drafted by the partners.
What Is the Difference Between a Limited Partnership and a Corporation?
Unlike with a corporation, limited partnerships do not have limited liability. This means that the general partner is responsible for any debts or obligations that the business incurs. Additionally, corporations are their own separate entities, while limited partnerships are not. This is an important distinction because in the event of a lawsuit, the limited partnership assets can be seized in order to satisfy any judgement.
How Do I Find the Right Attorney For My Limited Partnership?
Finding the right attorney for your limited partnership requires research and due diligence. It is important to make sure that the attorney you choose is familiar with the laws in California and the specific regulations in Los Angeles. In addition, make sure that the attorney has experience with limited partnerships and can offer legal advice that is tailored to your business. Finally, it is important to consider the cost of the legal services offered, as well as any potential payment structures.
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