How does a Limited Partnership (LP) work?
An LP is a preferred and commonly used way to structure a relationship between willing parties for a defined business venture. It is used to reduce risk, delineate responsibilities and share profits in a predetermined way. It is a well thought out, provincially regulated legal vehicle to raise capital for a venture without the expensive overhead of a public company. Each LP has one general partner (GP) and one or more limited partners. An LP is like a marriage of multiple parties. Like a real marriage, responsibilities are divided up and it takes a very strong sense of structure when 30 or 50 people marry. One party has the expertise for a certain business venture, in our case, multi-family residential real estate in North America. This is the GP. The other parties have a desire to invest some of their capital for significant returns, limited risks and potential tax savings. The GP usually executes all activities of the business venture, reports regularly to the investor partners and s
Related Questions
- I have a limited partnership (LP) that is registered as an LLLP. How does the partnership file an assumed name certificate with the Secretary of State?
- SHOULD THE SHARED OR FRACTIONAL OWNERSHIP USE A LIMITED LIABILITY COMPANY (LLC), OR LIMITED PARTNERSHIP (LP) OR LIMITED LIABILITY PARTNERSHIP (LLP)?
- What Is The Difference Between A Limited Partnership (LP) And A Limited Liability Limited Partnership (LLLP)?
