BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -This is a partner that does not participate in the daily functioning of the partnership firm, i.e. he does not take an active part in the daily activities of the firm. He is however bound by the action of all the other partners.

Detailed explanation-2: -A limited partner, often called a silent partner, is an investor. Unlike general partners in a limited partnership, limited partners don’t make business decisions. Because limited partners are not active in the business, the IRS doesn’t view income from the partnership as earned income.

Detailed explanation-3: -A limited partnership has two types of partners: general partners and limited partners. It must have one or more of each type. All partner, limited and general, share the profits of the business. Each general partner has unlimited liability for the obligations of the business.

Detailed explanation-4: -The general partner oversees and runs the business while limited partners do not partake in managing the business. However, the general partner of a limited partnership has unlimited liability for the debt, and any limited partners have limited liability up to the amount of their investment.

Detailed explanation-5: -Limited partners need to understand that they can become personally liable if they do not stick to their passive role. If a limited partner starts taking an active role in the business, that partner’s liability can become unlimited.