What contributes to a limited partner’s status?

A limited partner’s status primarily stems from their financial investment in the partnership, which can take the form of cash or property contributions. Unlike general partners, limited partners typically do not engage in the day-to-day management of the business. Their liability is limited to the amount of their investment, which is a central feature of limited partnerships.

When a limited partner contributes cash or property to the partnership, they gain their status and the associated legal protections that come with it. This contribution establishes their stake in the partnership while ensuring they are not personally liable for the debts and obligations beyond their investment.

In contrast, engaging in the direct management of the company or providing services can alter a limited partner's status, potentially exposing them to liability as a general partner. Therefore, the essence of a limited partner's status is directly tied to their financial contribution to the partnership.