Video: Types of Partnerships

In this lesson, Nick Palazzolo, CPA, dives into the intricate world of partnerships, unraveling the complexities of general partnerships (GPs), limited partnerships (LPs), and limited liability partnerships (LLPs). He breaks down the differences in liability, management, formation, and taxation between these entities, emphasizing the distinct features of each type. Nick explains the nuances of recourse and non-recourse debt as they pertain to partners' personal assets, ensuring there is a clear understanding of the risks and protections associated with each type of partnership. The lesson is rich with foundational knowledge, preparing for deeper dives into how these partnerships impact real-world business scenarios and tax implications, always keeping an eye toward the strategic decisions that partners must make in managing their investments and operations.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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All right. I promised you partnerships and oh boy, do we have them. We've got a bunch of different types of partnerships. We've got general partnerships, limited liability partnerships, and just limited partnerships. So just as our first pass through, you're not going to probably get absolutely everything here. There's a lot of different attributes and criteria for all of these. Take it one step at a time. And again, we also do have other lessons on partnerships, so it's not like you have to master all this right away. One key point to note is that limited partnerships are different than limited liability partnerships. That's LLPs and LPs. Again, that's just an important distinction as well. So LLPs and LPs are more similar to each other compared to general partnerships. LLPs and LPs offer some form of limited liability protection to their partners, whereas in a general partnership, all partners have unlimited liability. We're going to talk eventually, and actually many lessons about recourse and non-recourse debt. That's important to note. Recourse debt, if you want to just make a note of it, recourse debt is debt where someone can come after you personally for your assets. Non-recourse debt is debt where they cannot. They can only come after the assets of the partnership or the legal entity. So that's just something to note. I mean, you don't have to know it yet. We will see it in a lot of lessons. If you want to memorize that now, I would not say that's a bad idea. We got some main differences between general partnerships, limited liability partnerships, and limited partnerships. Now, generally speaking, like I said, GPs have unlimited liability, and as such, they are going to deal a lot more with recourse debt. These others are going

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