What defines a limited partnership?

A limited partnership is defined by the presence of at least one general partner and one limited partner. This structure is significant because it allows for a distinction between the responsibilities and liabilities of the partners. The general partner is fully liable for the debts and obligations of the partnership, as well as being responsible for the day-to-day management of the business. In contrast, limited partners have limited liability, meaning they are only responsible for the partnership's debts up to the amount they have invested and do not participate in the management of the business. This arrangement can attract investors who want to contribute capital without involving themselves in the management and operations of the business, thus benefiting from limited liability while still participating in the potential profits.