Limited Partnership Research Paper

Introduction

What is 'Limited Partnership - LP'A limited partnership (LP) exists when two or more partners unite to jointly conduct a business in which one or more of the partners is liable only to the extent of the amount of money that partner has invested. Limited partners do not receive dividends,What is a 'Dividend' A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, paid to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property. but enjoy direct access to the flow of income and expenses. This term is also referred to as a "limited liability partnership" (LLP). The main advantage to this structure is that the owners are typically not

This means that the limited partners have no management authority, and (unless they obligate themselves by a separate contract such as a guaranty) are not liable for the debts of the partnership. The limited partnership provides the limited partners a return on their investment (similar to a dividend), the nature and extent of which is usually defined in the partnership agreement. General Partners thus bear more economic risk than do limited partners, and in cases of financial loss, the GPs will be the ones which are personally liable.Limited partners are subject to the same alter-ego piercing theories as corporate shareholders. However, it is more difficult to pierce the limited partnership veil because limited partnerships do not have many formalities to maintain. So long as the partnership and the members do not co-mingle funds, it would be difficult to pierce the veil. Partnership interests (including the interests of limited partners) are afforded a significant level of protection through the charging order mechanism. The charging order limits the creditor of a debtor-partner or a debtor-member to the debtor’s share of distributions, without conferring on the creditor any voting or management

LLPs generally protect partners from each other's professional legal problems, such as negligence or malpractice. Liability is limited to the amount of money each partner contributes to the LLP.

Professional Organizations

Most states require each LLP partner to have a professional license in a chosen field. Therefore, most examples of LLPs include partnerships among physicians, attorneys, accountants, architects, licensed financial advisers, veterinarians and undertakers. California only allows LLPs for lawyers and accountants. The “Big Four” accounting firms are represented in the United States by LLPs, as is the world’s largest law firm, DLA Piper, whose American affiliate is DLA Piper LLP. Doctors and lawyers often form LLPs instead of general partnerships to protect themselves from the malpractice suits of their partners.

Decision of