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