Limited Partnership
A limited partnership ("LP") is characterized by at least one general partner and one limited partner. The general partners in an LP, like a general partnership, are responsible for the management of the business and are personally liable for the debts of the business. The limited partners, however, do not participate in the management of the business and therefore are not personally liable for its debts. Thus, limited partners are more akin to shareholders in a corporation. Limited partnerships are generally taxed like sole proprietorships and general partnerships. Limited partnerships are distinct from limited liability partnerships, in which all partners have limited liability.
Limited Liability
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 member in a limited liability company and shareholder in corporation like a limited partner in an LP is not personally liable for any of the debts of the company, other than for the value of his investment in that company. By contrast, sole proprietors and partners in general partnerships are each liable for all the debts of the business (unlimited liability).
Although a limited partner, member or shareholder's liability for the company's actions is limited, that person may still be liable for his own acts. For example, the directors of small companies (who are frequently also shareholders) are frequently required to give personal guarantees of the company's debts to those lending to the company. They will then be liable for those debts in the event that the company cannot pay, though the other shareholders will not be so liable.
California Governance
In California, the general provisions governing limited partnerships are found in California Corporations Code Section 15611 et seq. All limited partnerships have been required to file with the Secretary of State's office since July 1, 1984. Prior to that date, limited partnerships filed documents with the County Recorder's Offices in the county or counties in which they were doing business. A limited partnership is a partnership formed by two or more persons under the laws of this state and having one or more general partners and one or more limited partners. A foreign limited partnership is a partnership formed under the laws of any state other than this state or under the laws of a foreign country and having one or more general partners and one or more limited partners (or their equivalents under any name).
How We Serve Our Clients
With our experience working with entrepeneurs to establish new businesses we will guide you through the process of forming a new company, assisting you in choosing the appropriate legal structure and explaining the advantages of each for your particular enterprise. After the business is established, our attorneys will be at your disposal to answer general legal questions when they arise. Our clients also call on us to assist them during transitional periods, raising capital, locating venture partners, merging, selling, and closing a business.
