Final answer:
A limited partnership (LP) has investors whose liability may be limited to the amount they have invested in the partnership.
Step-by-step explanation:
The correct answer is option d. A limited partnership (LP) has investors whose liability may be limited to the amount they have invested in the partnership. This means that the partners in an LP are not personally responsible for the partnership's debts beyond the amount they have contributed to the partnership.
Unlike general partners in a general partnership, limited partners in an LP typically have limited involvement in the management of the partnership. They are more like passive investors who provide financial capital but do not participate in decision-making or day-to-day operations.
While a limited partnership still offers some tax benefits, such as the ability to pass through income and losses to the individual partners for tax purposes, it does not convey all of the tax benefits that accompany a regular partnership.
The correct answer is option d. A limited partnership (LP) is a type of business structure where there are general partners who manage the company and are fully liable for the debts of the partnership, as well as limited partners whose liability is restricted to the amount of their investment in the partnership.
This means that limited partners are protected from losing personal assets beyond their investment in the company. General partnerships contrast this, as all partners share responsibility for the business's debts and liabilities, with the potential risk of personal asset loss.
An LP does indeed offer tax benefits similar to a general partnership because each partner pays taxes on their share of the income, and the business itself does not have to pay taxes.
Furthermore, the LP structure often consists of silent partners who contribute financially but do not participate in daily management. These silent partners benefit from the business's success without being exposed to the same level of liability as the partners actively managing the company.
Thus, a limited partnership provides a balance between operational control and financial risk, making it an attractive option for many investors and entrepreneurs.