Get Your Business Funded: Creative Methods for Getting the Money You Need

Limited Partnerships

The final type of partnership that you can enter into, especially insofar as money goes, is a limited partnership. This is a very specific legal entity that has traditionally been used for real estate investments and motion picture financing.

With a general partnership, the partners all have equal say and equal liability. With a limited partnership, there is one general partner in charge of operations and one or several limited partners. Limited partners are like silent partners in that they have no say in the daily operations of the business, but they differ in that their exposure, their liability, is limited to the extent of their investment. That is a distinct advantage and benefit. They cannot be held liable for more than that amount. It helps to think of a limited partner as akin to a shareholder in a corporation—they have no real say but do get to share in any profits.

For your potential partner with cash, a limited partnership may be a very attractive option as it allows them to share in the profits without incurring more risk and liability than necessary.