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Definition

Limited partnership

A limited partnership is a modified form of a general partnership that includes two classes of owners: general partners and limited partners. There are no limits on the number of general or limited partners permitted in a limited partnership. Similar to a general partnership, the general partners are liable for the debts and obligations of the partnership, but the limited partners are liable only up to the amount of their investment. The limited partners may not exercise any significant control over the organization without jeopardizing their limited liability status.

A limited partnership is usually formed to raise money or to spread out the risk of a venture without forming a corporation. Limited partnerships are common in real estate development, oil and gas exploration, and motion picture ventures.

The words “Limited Partnership” or “Ltd.,” or “LP” identify this type of organization. For the privilege of limited liability, the limited partner usually accepts less compensation than a general partner and exercise less influence in the affairs of the firm. If the limited partners get involved in management, they risk their liability protection.


Limited partnership is a partnership arrangement in which the liability of one or more partners is limited to the amount of assets they have invested in the firm.


Limited partnership is a partnership arrangement in which the liability of one or more partners is limited to the amount of assets they have invested in the firm. A limited partnership cannot be formed unless a state allows it. 

A limited partnership must have at least one partner to assume unlimited liability for the debts of the firm. It may then take in any number of limited partners, partners who are legally barred from participating in the prtnership's management but enjoy limited liability for debts incurred by the firm. Limited partners stand to lose only the assets that they have contributed to the company if the creditors sue to recover unpaid debts.


Limited partnership is a partnership in which at least one owner is a general partner and one or more are limited partners, who are liable for loss only up to the amount of their investment.

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