Glossary Terms

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Limited Liability

The liability of an owner of an LLC, for the LLCs debts, is limited to the owners investment in the entity. The owners personal assets are protected. The LLC has the strongest limitation on personal liability, and therefore protects owners better than any other form of entity.

Limited Liability Company

An entity that provides owners with limited liability and pass-through taxation benefits. Governed by a private, flexible contract called an Operating Agreement. Owned by Members with membership certificates.

Limited Liability Limited Partnership

A new combination of LPs and LLPs. The general partners are afforded limited liability protection, in addition to the limited partners.

Limited Liability Partnership

A general partnership that affords limited liability protection to its partners. Normally used by professional firms.

Limited Partner

An investor in an LP or LLLP who is not involved in the management of the partnership. Liability is limited to the amount of the investment.

Limited Partnership

An entity composed of general and limited partners. General partners own and manage the company, so their liability exposure is widespread. Limited partners are only investors, not managers, so their liability is limited to their investment.


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