A partnership composed of one or more persons who control the business and are personally liable for the partnership’s debts (general partners), and one or more persons who contribute capital and share profits but who cannot manage the business and are liable only for the amount of their contributions (called limited partners).
A limited partnership is one step past a partnership. It is the first that offers some sort of limited liability for any of the partners. This entity type was designed to help people with an idea and a passion for work (but no money) connect with people who may have liked the idea and thought it would succeed (who had money). This was very effective when the cost of incorporation was very expensive and there were not many other options allowing limited liability. This option helps those who had money to fund a venture shield the rest of their money from a venture that did not go well.
The primary issue in a limited partnership is that the limited partners cannot participate in the control of the business. This is only an option for someone who wants to invest money and wait on the return. Getting involved in the operations of the business or trying to work in the business or do anything to help make the business succeed as a part of the operation of the business could destroy the limited liability protection given to the limited partner. If all of the partners are actively involved in the control of the business, it is simply a partnership.