Lisa and Nikki are business partners who have opened a venue in downtown Orlando and selected a Limited Partnership as their entity type. The ladies will act as the general partners and Xavier has agreed to function as their limited partner. How is Xavier's role in the business different from Lisa and Nikki's?

Question

Social Studies

Jacob Oneill

25 August, 10:24

Lisa and Nikki are business partners who have opened a venue in downtown Orlando and selected a Limited Partnership as their entity type. The ladies will act as the general partners and Xavier has agreed to function as their limited partner. How is Xavier's role in the business different from Lisa and Nikki's?

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Answers (1)

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Melanie May · Answer 1

Xavier has a limited liability up to the amount of his investment.

Explanation:

A Limited Partnership is an entity type that is formed by two or more partners. There are general partners, who run the business and have unlimited liability for all of the debts. The limited partner does not manage the business and has limited liability up to the amount of his investment. Lisa and Nikki as general partners run and oversee the business, and they have unlimited liability. While Xavier does not run the business and has limited liability up to the amount of his investment.