Limited Partner? General Partner? What’s the Difference?
In a partnership, the differences between a limited partner and a general partner can be significant, particularly when it comes to a comparison of the respective liabilities of a limited partner and a general partner. General partners are personally responsible for the debts and obligations of the partnership, regardless of how much capital the general partner has contributed to the firm. If there is more than one general partner, then the general partners are jointly liable for these obligations. These obligations can include liability for torts committed by a partner in the ordinary course of business of the partnership or with prior authorization, and a partner’s breach of trust.
In contrast, limited partners are not personally liable for the debts and obligations of the partnership, so long as they comply with the requirements of Indiana’s limited partnership statute. To put it simply, there is a big difference between a general partner and a limited partner in a limited partnership, and failure to know the difference can quickly turn a friendly business arrangement into one that is not so friendly.