Question 1

What is a limited partnership?

Accepted Answer

A limited partnership (LP) is a business entity with two types of partners: general partners (who manage the business and have unlimited personal liability) and limited partners (who invest capital but do not participate in management and have liability limited to their investment). In Florida, LPs are governed by the Florida Revised Uniform Limited Partnership Act (Chapter 620). LPs are used in: real estate syndications (the general partner manages the property; limited partners invest capital), oil and gas ventures, film production, and private equity funds. The LP provides: pass-through taxation (partnership tax treatment; no entity-level tax), limited liability for limited partners, and centralized management by the general partner.

Question 2

How does a limited partnership differ from a general partnership?

Accepted Answer

Key differences: a general partnership has only general partners (all partners manage and all have unlimited liability). A limited partnership has both general and limited partners (general partners manage and have unlimited liability; limited partners invest and have limited liability). Formation: a general partnership can be formed informally (no filing required). An LP requires filing a Certificate of Limited Partnership with the Florida Division of Corporations ($925 filing fee for LPs). Taxation: both are taxed as partnerships (pass-through). Liability: in a general partnership, all partners are jointly and severally liable for the partnership’s debts. In an LP, limited partners are liable only up to their investment.

Question 3

What happens if a limited partner participates in management in Florida?

Accepted Answer

Management participation: historically, a limited partner who participated in management lost their limited liability protection (the "control rule"). However, under the Florida Revised Uniform Limited Partnership Act (Chapter 620), the modern rule provides more protection: a limited partner does not lose limited liability solely by participating in management (Section 620.1303). Activities that do NOT cause loss of limited liability include: being a contractor, agent, or employee of the LP or the general partner, consulting with the general partner about the LP’s business, voting on major decisions (admission of new partners, dissolution, sale of assets), and serving as an officer, director, or shareholder of a corporate general partner.

Limited Partnership

Limited Partnerships

Structure

vs. General Partnership

Limited Partner Management

Related Terms

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