A limited partnership requires at least one general partner and one limited partner. The general partner is potentially liable for all the obligations of the partnership. One way to protect your partnership from liability is to have another entity, a corporation without assets, act as the general partner. The limited partner has limited liability. Limited partners may jeopardize their limited liability status if they actively participate in the business of the partnership.
A limited liability company requires one or more members which may be individuals, partnerships, limited partnerships, trusts, estates, associations, corporations, other limited liability companies or other business entities. Properly arranged, the membership interest in a limited liability company by one member is potentially protected against the creditors of the other members. Members are afforded limited liability similar to shareholders of a corporation and have pass-through taxes comparable to a partnership.
