Limited Partners Definition – What are Limited Partners

Limited partners definition. Analyzing the definition of key terms often provides more insight about concepts. Limited partners can be defined as – Partners who have no personal liability for partnership debts beyond the amounts they invest in the partnership. Limited partners can be contrasted to general partners, general partners having agency over the normal partnership decisions and also being exposed to liability in a similar way as a sole proprietor. A limited partner, by contrast, is not involved in the day to day decisions and therefore has some liability protect for personal assets, a limited partner’s investment in the partnership being at risk, but a limited partner’s personal assets having some protection. The ability for a limited partner to have liability protection allows partnerships to find more willing investors of capital.

 

 

General Partnership Definition – What is General Partnership?

General partnership definition. Analyzing the definition of key term often provides more insight about concepts. General partnership can be defined as: Partnership in which all partners have mutual agency and unlimited liability for a partnership’s debts. Like a sole proprietorship a general partnership is easy to form but also comes with the cost of liability exposer to the individual partners. A general partnership also need to be careful about the fact that they both partners have agency over the assets and liabilities of the partnership, an ability to make contracts and agreements on behalf of the partnership. The creating of a contract by one partner can obligate the other partner. If a limited partner is added to the partnership the partnership changes from a general partnership to another form.

Corporation Definition – What is Corporation?

Corporation definition. Analyzing the definition of key term often provides more insight about concepts. Corporation can be defined as: Business that is a separate legal entity under state or federal laws with owners called shareholders or stockholders. A corporation basically has some rights generally only given to humans like the right to own property. One of the benefits of this right is that it results in liability protection for the owner, the owner’s personal assets having more protection under a corporation then under a sole proprietorship or general partnership. The downside is that with the right granted to the corporation of ownership comes the responsibility to pay taxes. Corporations are typically taxed at both the corporate level and at the individual level at the point of distribution, at the point of dividend.

 

C Corporation Definition – What is C Corporation?

C corporation definition. Analyzing the definition of key term often provides more insight about concepts. C Corporation can be defined as: Corporation that does not qualify for nor elect to be treated as a proprietorship or partnership for income tax purposes and therefore is subject to income taxes; also called C corp. A C Corporation is the default setting for an organization that incorporates. A C corporation can be contrasted to pass through entities like an S corporation or LLC. A C corporation has liability protect but is subject to double taxation. An S corporation or LLC is designed, in part, to keep the liability protection and eliminate the double taxation.