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The Difference Between the Three Types of Partnerships

types of Delaware partnerships - general partnership vs. limited liability partnership

If you're looking to form a partnership in the state of Delaware, it's important to choose the correct type of partnership for your business needs. 

When forming a partnership using our easy online ordering form, you will find that there is a drop down menu with three partnership types to choose from. Let's take a look at each type of Delaware partnership.

General Partnership

General partnerships are the original type of partnership. A general partner is considered the owner of the partnership. General partners are actively involved in the management of the partnership and can make decisions on the company's behalf. There can be more than one general partner. 

General Partnerships offer no liability protection for the partners. All partners are held liable if one partner is sued. Many compare the general partnership to a sole proprietorship in this regard. 

This type of entity has subsequently become less popular as other entity types allow for more liability protection. 

Limited Partnership

A Limited Partnership has both a general partner and a limited partner.

Limited Partnerships are formed when a partner is an investor in a business but is not involved in day-to-day operations. The general partner is responsible for the management of the partnership and the limited partner is generally an investor only. Limited partners are often referred to as silent partners. They invest capital in exchange for a portion of the profits of the partnership.

The liability of a limited partner is determined by their investment in the partnership. They generally have limited liability in the company's debts and liabilities, up to the amount of capital that they have invested in the business. 

Limited partners must be careful though - if during litigation it is determined that they spend a significant amount of time managing the business direction, it can be determined that they were in fact acting as a general partner.

Limited Liability Partnership

Limited liability partnerships are the most common choice for professionals including attorneys, accountants, doctors, dentists, and other businesses that fall into the professional category.

Much like an LLC, the limited liability partnership protects the personal assets of the partners so they may not be used to satisfy business debts and liabilities. Individuals within a limited liability partnership may be held personally liable for wrongful or negligent acts but the other partners within the limited liability partnership are not liable for those acts. 

Selecting Your Partnership Type

We hope this helped to clear up any confusion about the different types of partnerships available in the state of Delaware. If you are ready to form your Delaware partnership, we have several partnership packages available to meet your needs. Feel free to contact us with any questions of give us a call directly at 800-223-3928.

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