The limited partnership is a hybrid of the general partnership.  Limited partners are added to the equation.  Limited partners bring investment money into the enterprise, but stay away from the day to day running of the firm and cannot participate in its management.  A limited partner’s risk extends only to his investment, while the general partners are fully liable.  The LP is treated as its own entity for liability purposes.  Generally speaking, there are more formalities involved in setting up a limited partnership, and there are also more costs.  Many of the formalities are similar to that of establishing a corporation.  This entity lasts until the death or withdrawal of a general partner or partners.  The main advantage of the limited partnership is to encourage investment in the business with the general partnership core retaining management control.  The limited partners are the investors, although all partners are individually taxed, whether they be “limited” or “general”.