What is a limited partnership?

A limited partnership is a business relationship in which two or more persons or organizations join together to carry on a business. Under Texas corporate law, each limited partner contributes money, property, or services to the organization and makes decisions concerning the business, but does not take an active role in the day-to-day operations. The limited partner is usually liable only to the extent of their financial contribution to the business and is not liable for any debts or obligations of the limited partnership. The limited partnership also contains one or more general partners, who manage the business, enter into contracts, and are liable for debts and obligations of the limited partnership. In many cases, the general partner is held personally liable for the debts and obligations of the limited partnership. Limited partnerships are popular in Texas because they are relatively simple to establish and provide limited liability to the limited partners. Limited partners are usually afforded protection from personal liability and their personal assets are not subject to attachment by creditors of the limited partnership. However, due to the potential exposure of the general partner, it is wise to seek legal counsel when forming and managing a limited partnership.

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