A limited partnership is a partnership that has two categories of partners: general partners and limited partners. A limited partnership must have at least one of each such type of partner.
General partners manage the day-to-day business and operations of the partnership, and generally owe certain duties to the other partners. As with partners of a general partnership, general partners of a limited partnership do not enjoy limited liability; they may become personally liable for obligations of the company. Limited partners, on the other hand, enjoy the same protections of liability as members of an LLC or stockholders of a corporation, but may not participate in the management of the partnership.
In Delaware, limited partnerships are formed by filing a certificate of limited partnership with the Secretary of State. Delaware limited partnerships regulated by the Delaware Revised Uniform Limited Partnership Act 6 Del. C. §§ 17-101 et seq. (â€œDRULPAâ€). Like limited liability companies, limited partnerships are accorded great flexibility in determining their internal structure, financing, and management.
As with general partnerships, limited partnerships are not normally subject to U.S. federal or Delaware income tax; rather, partners are taxed based on their share of the companyâ€™s income