How to Distinguish a General From a Limited Partnership
In a business partnership, two or more individuals collaborate to start and run a company under an agreement to share the profits. All partners contribute, though they may do so in different ways. Partners may contribute money, physical capital such as real estate or equipment, expertise or hard work. In many cases, all partners contribute some or all of these different things. In forming a partnership, entrepreneurs decide who will contribute what and lay out a partnership agreement that could be a general or limited partnership.
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Instructions
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Verify the legal identity of the business. Many businesses have this information on their websites or in their letterheads. If the company identifies itself as an LP (limited partnership) or LLLP (limited liability limited partnership), it is definitely a limited partnership. If it identifies itself as an LLC (limited liability company) or as a partnership, it may or may not be a limited partnership, and you will have to do further research.
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You can find more detailed company information on such websites as CrunchBase, Manta, Wikipedia and WikiMapia (see Resources). The information on these websites is usually reliable, but since it is user-submitted, it may be incorrect or outdated in some cases. Verify whatever you find there by going to the secretary of state's website for the state in which the company does business and look up the business there. If you cannot find the information on the state website, market research companies such as OneSource and Hoover's offer detailed company information for a price.
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Determine the assets that various partners bring to the business and the shares of the business that they hold. Do they split profits evenly? Do they split responsibilities evenly? Is there one partner who made most of the monetary investment? Is there another partner who makes most of the everyday managerial decisions? If all partners make equal and similar contributions to the partnership and get equal returns, it is probably a general partnership. If different partners make different levels or types of contributions, it could be a limited partnership. While a general partnership has only general partners, a limited partnership can have both limited and general partners. The limited partner is the one who contributed capital to the formation of the business but has little to do with the business's everyday workings.
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