Explain the differences between general partnerships and limited partnerships

Question

What will be an ideal response?

Answer 1

The differences between general partnerships and limited partnerships are as follows:
a. General partnerships are created by contractual agreement between two or more persons to carry on a business as co-owners for profit. Limited partnerships are created in the same manner, but most include one or more general partners and one or more limited partners on certificate filed with state.
b. In general partnerships, profits and losses are shared by agreement; or, in the absence of an agreement, they are shared equally. In limited partnerships, profits are shared equally, as required by certificate, and losses are shared up to the amount of each limited partner's capital contribution.
c. In general partnerships, partners have unlimited personal liability. In limited partnerships, the liability is limited for general partners; for others, it is limited to the amount of capital contribution.
d. In general partnerships, there is usually no minimum or mandatory amount of capital contribution, unless set by partnership agreement. In limited partnerships, the capital contribution is usually set by agreement.
e. In general partnerships, control over management is specified in the partnership agreement, or in the absence of an agreement, each partner has an equal role. In limited partnerships, only the general partners have control over management. If limited partners have some voting right, they will generally be subject to liability. Sometimes limited partners act as agents.