Limited liability partnership

A limited liability partnership is an organizational structure in which certain partners can only lose the amount of their investments. These investors, known as limited partners, are not liable for any additional losses suffered by the partnership beyond the amount of their investments. In exchange for this limited liability, limited partners have no control over the management direction of the entity. The general partner who runs the partnership is liable for the full extent of the entity's losses. This organizational structure mixes some aspects of a corporation (with its limited liability for limited partners) and partnerships (with its unlimited liability for the general partner). A limited liability partnership must have a formal agreement between the partners, so that the limited and general partners can be clearly identified. For tax purposes, this arrangement is a flow-through entity, where the partners are responsible for paying income taxes, rather than the entity.