What liability do limited partners hold in a business?

Limited partners in a business hold liability that is specifically limited to their investment in the partnership. This means that they risk losing only the amount they have invested and are not personally responsible for the business's debts beyond their financial contribution. This structure is designed to protect limited partners from greater financial liabilities and encourages investment by providing a safety net.

In a limited partnership, there is usually a general partner who manages the business and maintains unlimited liability for the partnership's debts, while limited partners typically do not participate in the day-to-day operations, safeguarding their personal assets from any potential financial obligations of the business. Thus, the nature of liability for limited partners fundamentally supports the distinction between their role as investors and that of the general partner, highlighting the importance of understanding the implications of different partnership structures in business.