Limited Liability Partnership Partnerships In this lesson, students will be able to identify characteristics of partnerships. Students will be able to identify and/or define the following terms: Partnership General Partnership Limited Partnership Limited Liability Partnership

Hi, would you like to open a briefcase company with me? Yes! We will sell lots of them because there is no other way to carry lots of documents around! Unlike a sole proprietorship, a partnership is a business owned and operated by two or more people.

General Partnership The most common type of partnership is a general partnership. In a general partnership, all partners share equally in responsibility and liability.

If you form a general partnership, your partner’s actions directly affect you.

Limited Partnership Another type of partnership is a limited partnership. In a limited partnership, one partner must be a general partner or responsible and liable for the business. The other partners are limited partners.

The limited partner only contributes money and has limited liability.

Limited Liability Partnership Only some individuals are allowed to form such partnerships. Doctors, lawyers, and accountants are allowed to form limited liability partnerships. In these partnerships, liability is limited.

In limited liability partnerships (LLPs), each partner is a limited partner and only responsible for his own actions.

Liability It is important to remember that liability is the legal obligation to pay all debts. In the three different forms of partnerships, liability differs. The varying degrees of liability determine the various types of partnerships.

General partners share equally in responsibility and liability.

In a limited partnership, one partner must be fully liable and responsible.

The limited partner only contributes money and has limited liability.

In limited liability partnerships, all partners have limited liability in some situations.

EXIT QUIZ List the three types of partnerships. Who is liable and responsible in a general partnership? How do limited partnerships function? Why would a partner chose to be a limited partner? Who is allowed to form a limited liability partnership? Why?