Limited partners bear lower risk than general partners because they are liable for up to only the amount they invested in the business.
This means that if the business incurs losses or faces legal liabilities, limited partners will only lose the amount they invested in the business and are not responsible for any additional debts or obligations. In contrast, general partners are personally liable for all the business's debts and obligations, which puts them at a higher risk. Limited partners do not receive more of the business's profit than general partners, nor are they exempt from paying taxes on their personal income. However, limited partners are not required to contribute capital to the business, which is a benefit that allows them to invest in a business without the same level of financial commitment as general partners.
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