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The partner with unlimited liability is generally the initial person who started the partnership and owns the majority of the company.

Unlimited liability means if the company fails, files for bankruptcy and you owe debts; then your personal assets can be seized such as your home, car, contents of your bank accounts to pay off the debts.

The other partner(s) are only liable for their investment in the company.

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15y ago
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12y ago

At the basest level (Written or unwritten, simply a handshake agreement, or even an implied partnership) you would be operating as a "General Partnership". General Partnerships have no limits on the potential liability, you are personally responsible for your own debt, and the debts of the partnership and the partnership is responsible for all debts of all the partners, so you become liable for all the personal debts of all your partners.

There is a subset of partnership arrangements known as Limited Partnerships, if you comply with all the formalities and structure it properly, a limited partnership can create 2 classes of partners: Limited Partners and General Partners. General Partners are still 100% liable for all debts. But in theory the limited partners are not liable.

In practice the lines can blur. It is not title, but action that determines if you are a "General" or "Limited" partner. If you have an active participation in the management of the partnership you are a general partner.

Over the last 20-30 years the courts have demonstrated that reliance on a limited partnership to preserve assets, or to limit liability, is misplaced faith.

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12y ago

The capital of the partnership are partner and the liability is unlimited for that purpose all partners performs their duties well and proper manner. If they not perform their duty properly and any loss occurred then the personal property may be used.

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9y ago

Limited liability is a type of liability that cannot exceed the amount that has been invested in a partnership or limited liability company. Limited liability protects personal assets from the risk of being seized to satisfy creditor's claims, debts and other obligations. For privately or publicly held corporations, a shareholder's responsibility for the company's debts is limited to the par value of paid up shares. The company itself as a legal entity is liable for the rest.

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10y ago

General partner has unlimited liability since the general partner is in charge and makes decisions for the partnership.

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Q: WHAT is true for a limited liability partnership?
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Related questions

Is this true or false The 3 types of partnerships are general partnership unlimited partnership and unlimited liability partnership?

The ones I'm aware of (In the US) are General Partnership, Limited Partnership (LP), Limited Liability Partnership (LLP), and Limited Liability Limited Partnership (LLLP)


What does LLP after a company name stand for?

Limited Liability Partnership


How many limited liability partnerships compare with general partnerships?

The main difference between limited liability partnership and general partnerships is limited liability. Partners of an general partnerships are liable for all debts accumulated. Partners of an limited liability partnership are enjoying limited personal liability protection. However many people may prefer to incorporate Limited Liability Company instead of an limited liability partnership.


How many types of partnership possible?

4 types -general partnership -limited partnership -master limited partnership -limited liability partnership


Features of limited partnership?

limited partnership has two partners with different liability;general partners and limited partners.


What type of business has the most liability partnership sole proprietorship corporation or limited liability partnership?

The liability of various forms of business are as follows: Partnership: The liability of the partners is joint, several and unlimited. Sole proprietorship: The liability is of the proprietor is unlimited. LLP: The liability is limited by MOA and AOA.


What is LLP stand for?

Limited Liability Partnership


What does PLLC stand for after an attorneys name?

PLLC is a combination of two business forms. The partnership and the LLC. PLLC stands for partnership limited liability corporation.


What suitable designation can be used by partner according to the partnership act 1932?

The Partnership Act of 1932 allows for a Limited Liability Partnership. In a Limited Liability Partnership, one partner is not responsible for another partner's negligence and misconduct. Depending on the state, and the partnership, there are varying degrees of limited partnership.


What is limited Liability insurance?

Limited liability is a concept whereby a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. A shareholder in a limited liability company is not personally liable for any of the debts of the company, other than for the value of his investment in that company. The same is true for the members of a limited liability partnership and the limited partners in a limited partnership. By contrast, sole proprietors and partners in general partnerships are each liable for all the debts of the business (unlimited liability).


What is L.P. at the end of a business name?

Limited Partnership. Sometimes called Limited Liability Partnership, or LLP.


What are the characteristics of a partnership?

If the partnership is a general partnership, all partners assume unlimited liability. However, if the partnership is a limited partnership, one or more of the partners assumes unlimited liability