Benefits of Limited Partnership
Limited partnership refers to when two people form a professional relationship where there is a general and limited partner. Whereas the general ownership treats all the partners equally with regards to liability and decision making, in the limited partnership, a general partner normally makes the important decisions. Further down are major benefits of limited partnership.
1. Offers asset protection
Limited partners in the limited partnership receive asset protection. This means when any limited partner faces court action or is sued by other people, the assets in the limited partnership will be protected from confiscation. This is a major reason why business people are now choosing limited partnership as limited partners will be safe from liability in business lawsuits.
2. Attracts investors
It is simpler to attract numerous investors for a proposition like limited partners. In fact, forming limited partnerships also assists with anonymity, credibility and lawsuit protection. These factors are very compelling to investors and it may help attract more investors than running other kinds of partnerships.
3. Reduces effort
With little effort, limited partners can share the profits gained from the limited partnership. They do not even have to possess good business skills to gain these profits as the general partner is responsible for all decisions. In addition, when the business venture fails, limited partners are shielded from most of the legal issues and liability that may arise.
4. Provides control
For a general partner in limited partnership, the benefits attained are also many. It can not only offer a good capital source for the company, but it also provides most of the control concerning the daily operations of the company to the general partner.
Limited partnership has some demerits also. For instance, there are normally more formalities, state requirements and filings with this kind of partnership as compared to using other forms of business like sole proprietorship.