| The general partner is responsible for | | | | You will often see this form of business |
| running the business efforts. When | | | | used for restaurants and other high risk |
| people deal with the limited | | | | business ventures. |
| partnership, they are essentially | | | | What if you are considering investing in |
| dealing with the general partner and its | | | | a limited partnership, but also want to |
| employees. The limited partners, | | | | participate in the running of the |
| however, are in a unique position. | | | | business? Depending on the law of your |
| A limited partnership provides | | | | state, there may be a way to do this. It |
| protection from liability to the limited | | | | works like this. The general partner in |
| partners much as you would find with a | | | | the limited partnership is converted |
| corporation or LLC. If the partnership | | | | into a corporation. The limited partners |
| is sued for something, the limited | | | | then invest in the corporation in |
| partners cannot be named as defendants | | | | exchange for shares of corporate stock. |
| in the lawsuit. Ah, but there is a | | | | One or more limited partners may then be |
| tradeoff for this protection. To | | | | hired by the corporation as employees to |
| maintain the liability protection, the | | | | help run the business. |
| limited partners cannot participate in | | | | This is a unique strategy that is viable |
| the day to day running of the business. | | | | in some states, but not in others. Make |
| In practical terms, this means the | | | | sure to get competent legal advice from |
| limited partners are essentially the | | | | a business attorney in your area before |
| deep pockets for the business. They | | | | implementing it. If it is viable in your |
| contribute the funds to get the business | | | | state, it can be a great way to approach |
| up and running, but don't do much else. | | | | high risk business ventures. |