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Finance Glossary

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Over 700 finance terms, Shmooped to perfection.

Limited Partnership


A limited partnership is a way of organizing investors who come together for a specific goal (let's be real, here: the goal is  to make lots of money).

For example, a venture capital investment company is a type of limited partnership. There are two types of partners in this structure: the general partners and the limited partners. The general partners are the ones who do the work of taking the money and investing it. The guys who sit around and hope the general partners are making them money are the limited partners.

Limited partnerships can help save some of your cash from the tax man, but they require lots of trust. To be a limited partner, you can't play any role in management. You have to stay passive, which can be hard if you see someone else investing your money in ways you're not quite sure about.