LIMITED PARTNERSHIP
VERSUS LIMITED
LIABILITY COMPANY
Duties of Partner in Limited Partnerships and Limited Liability Company
ZISHENG (SAM) RUAN
02/17/2017
Legal Issue
Many people have a dream to become a business owner. Since lack of fund and
other resources, most people just start a small business. In order to be successful, it is
necessary to choose the most appropriate structure.
There are some common business entity types include limited liability companies
(LLC), limited partnerships, sole proprietorships, S corporations, and S corporations.
Most people are willing to start a limited liability company or limited partnership
because of some prominent advantages, but they don’t notice their disadvantages.
It is easy to form and operate a partnership, but the partners need to be liable for
both their and other partners’ actions. General partners need to take individual
responsibility in some case even if they do nothing wrong. Limited partners cannot
participate too much in business decisions, otherwise, they may change their status from
limited partner to general partner.
An LLC has several advantages like tax flexibility, less paper work, limited liability,
etc. But owners may be confused about their roles because most people in an LLC
generally do not have a specific role. Besides, in many jurisdictions, if a member leave
the LLC, the LLC will cease to exist.
The aim of this paper is compare their respective advantages and disadvantages
through analyze real cases from textbook and outside class resources to help people
know more clearly about their responsibilities and make a better choice.
Legal Authority
Duties of partner in limited partnerships
In partnerships, in order to be successful, partners need to trust and corporate with
their partners. People may have fiduciary duties which based on the people’s role in the
partnerships. We should notice that not everyone has the same fiduciary duties. The
fiduciary duties are different that depends on whether you are a general partner or a
limited partner in the business.
General partners’ duty
“A general partner is an owner of a partnership who has unlimited liability.”
(Citation) The general partners always have fiduciary duties, since they are responsible
for manage the partnerships and active in the daily operations of the business. Also,
