A limited partnership comprises one or more limited partners and one or more general partners. The general partner or partners will have control of the partnership’s day-to-day operational aspects and any other matters allowed by the general partner as outlined in the LP Agreement. All LPs should have an agreement that will clearly set out the general partner’s rights and responsibilities and the matters upon which the limited partners will have a vote or control in terms of the LP’s operations.
Limited partners should not take part in the active management of the partnership as limited partners. However, they can be employed by the LP. The general partner accepts responsibility and liability for the business entity in exchange for the limited partners’ non-participatory financial backing. The general partner is a corporation, LLC, or another limited partnership in most cases because the general partner is ultimately accountable for all the obligations and debts of the LP.