What advantage do limited partners enjoy compared to general partners?

Limited partners enjoy the advantage of limited liability for debts incurred by the partnership, which is a fundamental characteristic of limited partnerships. This means that their financial risk is confined to the amount they have invested in the partnership; they are not personally liable for the debts or obligations of the partnership beyond their investment. This protection encourages investors who wish to contribute capital without risking their personal assets.

Other options present distinct attributes that do not apply to limited partners. For instance, limited partners do not have the authority to engage in the daily operations or management of the partnership, which is typically the responsibility of general partners. This separation of roles helps to maintain the limited liability status of the limited partners. Additionally, while limited partners have restrictions regarding the management of the partnership, they may encounter limitations on transferring ownership, which depends on the partnership agreement. Thus, the limited liability of limited partners is a critical aspect that makes participation in a limited partnership appealing for many investors.