What is the primary advantage of a limited partnership?
Practice Questions
Q1
What is the primary advantage of a limited partnership?
Unlimited liability for all partners
Limited liability for some partners
Equal management rights for all partners
No need for a formal agreement
Questions & Step-by-Step Solutions
What is the primary advantage of a limited partnership?
Step 1: Understand what a limited partnership is. It is a business structure with at least one general partner and one limited partner.
Step 2: Know the role of the general partner. The general partner manages the business and has unlimited liability, meaning they are responsible for all debts.
Step 3: Learn about the limited partner. The limited partner invests money but does not manage the business and has limited liability.
Step 4: Recognize the primary advantage. Limited liability means that the limited partner's personal assets are protected from business debts.
Step 5: Conclude that this protection is the main benefit of a limited partnership.
