Limited partnership

A limited partnership is like a game of tag with a big kid and a small kid. The big kid is called the general partner and gets to make all the important decisions like where to go and what to do. The small kid is called the limited partner and they just follow and play the game but don’t get to make any decisions.

Now imagine the game of tag costs money to play. The general partner is the one who puts up the money to play, but the limited partner also wants to join in on the fun. So, they make a deal where the limited partner puts in some money as well but they will only ever have to pay that much, no matter what happens or how much it costs to play the game.

If the game of tag goes really well and they win lots of prizes, the general partner gets to keep a bigger share of the winnings because they put in more money at the beginning. But if the game goes badly and they lose money, the limited partner only has to pay what they already agreed to and the general partner has to cover the rest of the costs.

So, a limited partnership is like a game where one person is in charge and gets to make all the decisions, but another person gets to join in and play along without having to risk too much money.