While incorporating in Delaware with a company or individual, roles and liabilities should be appropriately set. There are two favorite partnership type: general partnership and limited partnership.
What are the differences?
The general partnership is the most common partnership type. Within this partnership model, all partners contribute to the daily duties of the business and have equal liability. All partners have the right to say something about the critical decisions and binding agreements. Unless otherwise stated, each partner has equal responsibility and contribution to the company. There should be a “partnership agreement” that sets the roles, liabilities and the scope of authority of the partners.
With a Limited Partnership, on the other hand, a partner with limited liability may not be included in the daily mechanics of the company. These partners are economically bound to the company, and their obligations depend on their economic contribution. There should be at least one general partner in a limited partnership so that daily duties can be performed. Responsibilities of the general partner are limited according to the investment he/she made. In the case of a legal situation, the personal assets of the general partner can also be included in the investigation.
Limited Partnerships are usually used for real estate businesses. There is one general partner and, to create more capital, there are many limited partners. You can have less liability with a Limited Partnership; however, unfortunately, you have no right in the decision mechanism of a company.
Many limited partners have been asked to change their situation of limited partnership so far. So, limited partners should guarantee their limited liability is under protection with their attorneys.
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