Owners Limited Responsible Partnership General Business Meaning Potential

In the United States, there are many ways for businesses to form. The most basic way is a "general partnership" or "partnership," where two or more people or organizations create a new business. They "share the ownership," meaning that each person has part of the business. The owners are "liable" for the company, meaning that are responsible for the company's "debts" (the money it owes to other people and organizations). If someone "sues" the general partnership, meaning that the company is taken to court, then the owners are responsible for the results of the "lawsuit" (the case in court).

If the business is small and simple, a general partnership is probably okay. But if the business grows and has a lot of debt or "risk" (the probability that something bad will happen), then the owners usually need to look for a different way to organize the business.

Some of these companies are organized as "limited partnerships," where there are one or more "general partners" and one or more "limited partners." A "general partner" has all the responsibilities described for a general partnership. A "limited partner" has "limited liability," and cannot be entirely responsible for the company's debts and lawsuits. A limited partner is responsible only for a part of the debt, related to the size of his or her initial "investment" (the amount of money that the limited partner gave to help start the business).

Finally, a "limited liability partnership" lets all of the owners have limited liability. Limited liability partnerships are usually chosen when all of the owners want to be involved in "managing" (leading) the company.