Business Glossary

organization made up of a general partner, who manages a project, and limited partners, who invest money but have limited liability, are not involved in day-to-day management, and usually cannot lose more than their capital contribution. Usually limited partners receive income, capital gains, and tax benefits; the general partner collects fees and a percentage of capital gains and income. Typical limited partnerships are in real estate, oil and gas, and equipment leasing, but they also finance movies, research and development, and other projects. Typically, public limited partnerships are sold through brokerage firms, for minimum investments of $5,000, whereas private limited partnerships are put together with fewer than 35 limited partners who invest more than $20,000 each.

business organized as a separate legal entity with ownership evidenced by shares of stock. The corporation is formed by filing thearticles of incorporationwith the state authority, who returns it with a certificate of incorporation; the two documents together become the corporate charter. Each founding stockholder receives from the company a specified number of shares of capital stock. A stockholder may sell owned shares to other investors. The corporation is a legal entityseparate from its owners. Advantages of a corporation are the ability to obtain large amounts of financing through a public issuance, ease of transferring shares, limited liability of owners, unlimited life, and professional management.

form of business organization created by an agreement between two or more persons who contribute capital and/or their services to the organization. Advantages are: (1) it is easily established with minimal organizational effort and costs; and (2) it is free from special government regulation. Disadvantages are: (1) it carries unlimited liability for the individual partners (firms organized as co-partnerships do not dissolve with the death or withdrawal of a partner); (2) it is dissolved upon the withdrawal or death of any of the partners; and (3) its ability to raise large amounts of capital is limited. general partner are those who are responsible for the day-to-day operations of the partnership and who are responsible for the partnership's total liabilities, while limited partner are those who contribute only money, who are not involved in management decisions, and whose liability is limited to their investment.