Limited Partnership (LP)
A California LP may provide limited liability for some partners. There must be at least one general partner that acts as the controlling partner and one limited partner whose liability is normally limited to the amount of control or participation of the limited partner.
The limited partner is primarily a passive investor, and normally is not active in management and control of the business on a day-to-day basis.
General partners of an LP have unlimited personal liability for the LP’s debts and obligation.
Although a written partnership agreement is not required to form a California limited partnership (i.e. an oral agreement suffices), the advisability of a formal written agreement can not be over-stressed.