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Limited Partnerships are managed by a “general partner” that is personally responsible for the company like other partnerships, and “limited partners” whose exposure is limited to their investment in the venture.

Limited partnerships are technically securities, and offer the ability to attract investors by offering flexible return scenarios, limited liability, and often times certain tax advantages.

Limited partnerships originated centuries ago in France as a method for farmers to entice wealthy nobleman to invest in their endeavors without risking their fortunes. Now, in California, the limited partnership is a specific business form that must be registered with the Secretary of State.

Real Estate, securuties, and other investment groups often use the limited partnership entity, often creating a limited partnership in conjunction with an LLC or other entity to act as the general partner.

A key advamtage to a limited partnership is that it allows investment without relinquishing control over management. In an LLC or corporation, investment and control are usually intertwined. With a limited partnership, the majority of the financial investment (or “capitalization”)  might come from one or more limited partners who do not exercise any control over the operation of the business.