A limited partnership (LP) is a business entity created under state law that consists of both general partners and limited partners. General partners manage and run the partnership and are personally liable for its debts and obligations and therefore a separate company with limited liability protection typically needs to be formed to protect the general partners. Limited partners contribute capital to the partnership but unlike general partners, typically do not participate in the management of the business. Personal liability for limited partners is limited to the amount of capital that they invest in the business.
To form a LP, the partners are required to file a formation certificate with their appropriate state agency and pay a filing fee