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This type of partnership is suitable to some kinds of investors. The following are the advantages of limited partnership:
(Best) Limited Liability Partnership Advantages
1. Suits Cautious Investors. There are persons who have money and want to invest but do not want to incur unlimited liability. Limited partnership best suits these persons because there is a category of special partners whose liability is limited.
2. Stability. The death, lunacy or bankruptcy of a special partner does not dissolve limited partnership. This partnership is more stable than the general partnership.
3. Better Management. Limited partnership is better managed, Special partners can only give suggestions but cannot participate in management. The management of the firm is in the hands of general partners. They work without any interference from special partners. liven there will be less rift among partners and the management will be smooth.
4. More Resources. Limited partnership will be able to mobilize more resources because more persons will be willing to invest because of limited liability. They will not incur unlimited liability from the firm; so they will be ready to invest more in the firm.
Disadvantages of Limited Partnership
Some of the disadvantages of limited partnership are discussed as follows:
1. Dominance of General Partners. Limited partnership is exclusively managed by general partners even though investments are made by special partners also. Special partners are only entitled to give suggestions and it is up to general partners whether to accept it or not. They are at the mercy of general partners.
2. Legal Requirements. A number of legal requirements are required for limited partnership. If the firm is not registered, then it is considered as a general partnership.
