ld him is too dangerous to use for business and gets into an accident, the victim's all too eager lawyer prevails in court, so *you* and Mike are jointly and individually personally responsible for the $1.5 million judgment that the court has awarded. Your savings, your personally owned cars, even your home might be seized to satisfy this judgment.

A Limited Partnership must have one General Partner and at least one Limited Partner. The Limited Partner has "limited liability"--and may not participate in the decision making of the entity or file paperwork, sign contracts or otherwise manage its business. The General Partner is liable for

Do you operate a business with your spouse or significant other? Does your business require capital and time commitments that are too great for you to handle alone? The Limited Partnership could be the ideal legal entity for you to use to operate your business.

A partnership is simply a legal entity that is owned by two or more people or entities. There are three kinds of partnerships:

1. The General Partnership (GP)--this is the kind of partnership most mom-and-pop entrepreneurs are talking about when they say that they operate as a "partnership".
2. The Limited Liability Partnership (LLP)--this is a legal entity that is restricted to professionals such as lawyers and attorneys, who are required by state law to use this type of legal entity; this does not apply to most entrepreneurs, so we will not discuss it here.
3. The Limited Partnership (LP)-which is comprised of at least 1 General Partner and one or more limited partners.

A partnership can provide a valuable tool for bringing in additional parties to manage or finance your business activities. On the other hand, all partnerships have a distinct disadvantage: the acts of one partner can involve the others. The individual partners can be "jointly and severally liable" for the acts of other partners, whether they knew of them or authorized them or not. This is why you should never form a partnership with anyone that you don't know well or trust to manage your business competently.

No matter how well you know or trust your partner, you should never, ever, ever have a General Partnership. In fact, you should never personally be a general partner in any kind of partnership. The general partner has the decision- making power in the partnership, but the price of that power is exorbitant. The General Partner is personally responsible/liable for all acts of the partnership and its partners, whether the General Partner authorized those acts or not.

This is why the typical mom and pop general partner is even more dangerous than the sole proprietorship, from an asset protection standpoint. Because each of you is personally responsible for the actions of the partnership and of the other party, you stand to lose your personal assets if a lawsuit is brought against you and your business assets cannot satisfy the judgment. It might seem like you're sharing the responsibilities of running your business, but in fact you are fully responsible not only for what you do, but for what your partner does. If Mike drives that company car that you've told him is too dangerous to use for business and gets into an accident, the victim's all too eager lawyer prevails in court, so *you* and Mike are jointly and individually personally responsible for the $1.5 million judgment that the court has awarded. Your savings, your personally owned cars, even your home might be seized to satisfy this judgment.

A Limited Partnership must have one General Partner and at least one Limited Partner. The Limited Partner has "limited liability"--and may not participate in the decision making of the entity or file paperwork, sign contracts or otherwise manage its business. The General Partner is liable for

ty that is restricted to professionals such as lawyers and attorneys, who are required by state law to use this type of legal entity; this does not apply to most entrepreneurs, so we will not discuss it here.

The Limited Partnership (LP)-which is comprised of at least 1 General Partner and one or more limited partners.

A partnership can provide a valuable tool for bringing in additional parties to manage or finance your business activities. On the other hand, all partnerships have a distinct disadvantage: the acts of one partner can involve the others. The individual partners can be "jointly and severally liable" for the acts of other partners, whether they knew of them or authorized them or not. This is why you should never form a partnership with anyone that you don't know well or trust to manage your business competently.

No matter how well you know or trust your partner, you should never, ever, ever have a General Partnership. In fact, you should never personally be a general partner in any kind of partnership. The general partner has the decision- making power in the partnership, but the price of that power is exorbitant. The General Partner is personally responsible/liable for all acts of the partnership and its partners, whether the General Partner authorized those acts or not.

This is why the typical mom and pop general partner is even more dangerous than the sole proprietorship, from an asset protection standpoint. Because each of you is personally responsible for the actions of the partnership and of the other party, you stand to lose your personal assets if a lawsuit is brought against you and your business assets cannot satisfy the judgment. It might seem like you're sharing the responsibilities of running your business, but in fact you are fully responsible not only for what you do, but for what your partner does. If Mike drives that company car that you've told him is too dangerous to use for business and gets into an accident, the victim's all too eager lawyer prevails in court, so *you* and Mike are jointly and individually personally responsible for the $1.5 million judgment that the court has awarded. Your savings, your personally owned cars, even your home might be seized to satisfy this judgment.

A Limited Partnership must have one General Partner and at least one Limited Partner. The Limited Partner has "limited liability"--and may not participate in the decision making of the entity or file paperwork, sign contracts or otherwise manage its business. The General Partner is liable for

for the acts of other partners, whether they knew of them or authorized them or not. This is why you should never form a partnership with anyone that you don't know well or trust to manage your business competently.

No matter how well you know or trust your partner, you should never, ever, ever have a General Partnership. In fact, you should never personally be a general partner in any kind of partnership. The general partner has the decision- making power in the partnership, but the price of that power is exorbitant. The General Partner is personally responsible/liable for all acts of the partnership and its partners, whether the General Partner authorized those acts or not.

This is why the typical mom and pop general partner is even more dangerous than the sole proprietorship, from an asset protection standpoint. Because each of you is personally responsible for the actions of the partnership and of the other party, you stand to lose your personal assets if a lawsuit is brought against you and your business assets cannot satisfy the judgment. It might seem like you're sharing the responsibilities of running your business, but in fact you are fully responsible not only for what you do, but for what your partner does. If Mike drives that company car that you've told him is too dangerous to use for business and gets into an accident, the victim's all too eager lawyer prevails in court, so *you* and Mike are jointly and individually personally responsible for the $1.5 million judgment that the court has awarded. Your savings, your personally owned cars, even your home might be seized to satisfy this judgment.

A Limited Partnership must have one General Partner and at least one Limited Partner. The Limited Partner has "limited liability"--and may not participate in the decision making of the entity or file paperwork, sign contracts or otherwise manage its business. The General Partner is liable for

neral Partner authorized those acts or not.

This is why the typical mom and pop general partner is even more dangerous than the sole proprietorship, from an asset protection standpoint. Because each of you is personally responsible for the actions of the partnership and of the other party, you stand to lose your personal assets if a lawsuit is brought against you and your business assets cannot satisfy the judgment. It might seem like you're sharing the responsibilities of running your business, but in fact you are fully responsible not only for what you do, but for what your partner does. If Mike drives that company car that you've told him is too dangerous to use for business and gets into an accident, the victim's all too eager lawyer prevails in court, so *you* and Mike are jointly and individually personally responsible for the $1.5 million judgment that the court has awarded. Your savings, your personally owned cars, even your home might be seized to satisfy this judgment.

A Limited Partnership must have one General Partner and at least one Limited Partner. The Limited Partner has "limited liability"--and may not participate in the decision making of the entity or file paperwork, sign contracts or otherwise manage its business. The General Partner is liable for

ld him is too dangerous to use for business and gets into an accident, the victim's all too eager lawyer prevails in court, so *you* and Mike are jointly and individually personally responsible for the $1.5 million judgment that the court has awarded. Your savings, your personally owned cars, even your home might be seized to satisfy this judgment.

A Limited Partnership must have one General Partner and at least one Limited Partner. The Limited Partner has "limited liability"--and may not participate in the decision making of the entity or file paperwork, sign contracts or otherwise manage its business. The General Partner is liable for all the activities of the Limited Partnership. Therefore, you do not ever want to be the general partner in your limited partnership.

A little creativity can resolve this problem. Because a partnership can be comprised of two or more persons or entities, a corporation or a limited liability company (LLC) could be the general partner. Since these entities by definition have limited liability, your general partner's liability would be limited to the assets of that corporation or LLC (which could very well have no assets at all).