What role does a limited partner play in a limited partnership?

In a limited partnership, a limited partner plays the role of contributing capital to the business while enjoying limited liability protection. This means that their financial risk is constrained to the amount of their investment in the partnership, protecting their personal assets from being pursued to settle the partnership’s debts or liabilities.

Limited partners do not participate in the day-to-day management of the partnership; this role is typically reserved for general partners, who have full control and are personally liable for the debts of the partnership. Additionally, while some entities may have reporting requirements, filing annual reports is not specifically a role that characterizes limited partners. Thus, option B accurately encapsulates the primary responsibilities and protections afforded to limited partners in the context of a limited partnership arrangement.