Difference between (GP, LP, & LPS)

Categories Limited Partnership General Partnership Limited Partnership

(LP) (GP) Shares
Definition A partnership with A partnership with A type of security
at least one general two or more that represents
partner and one or partners who share ownership in a
more limited equal rights and limited partnership
partners responsibilities
Formation Requires filing a No formal Requires issuing
certificate of limited documentation shares to investors
partnership with the required by law through a
state prospectus
Management General partner All partners have Shareholders have
manages the equal say and no management
business; limited control in the rights or duties
partner does not business
participate in daily
operations
Liability General partner has All partners have Shareholders have
unlimited liability; unlimited liability for limited liability up to
limited partner has the partnership’s their investment
limited liability up to debts and
their investment obligations
Taxation Partnership is not Partnership is not Partnership is not
taxed; profits and taxed; profits and taxed; profits and
losses are passed losses are passed losses are passed
through to the through to the through to the
partners partners shareholders
Advantages Attracts investors Easy and Provides liquidity
who want to avoid inexpensive to form; and flexibility for
liability and partners can pool investors;
management resources and skills shareholders can sell
responsibilities; or transfer their
general partner can shares
raise capital without
losing control
Disadvantages General partner Partners are jointly Shareholders have
bears all the risk and and severally liable no voting rights or
responsibility; for the partnership’s influence in the
limited partner has debts and partnership; shares
no voice in the obligations; may be subject to
business potential for price fluctuations
conflicts among
partners