Future Business Leaders of America (FBLA) Agribusiness Practice Test

What type of partnership allows for limited liability for specific partners?

1. General partnership

2. Registered limited liability partnership

3. Sole proprietorship

4. General and family partnership

The correct answer is: Registered limited liability partnership

A registered limited liability partnership (LLP) is a specific type of partnership designed to provide limited liability protection to its partners. In an LLP, partners are typically shielded from personal liability for certain debts and obligations of the partnership, meaning they are not personally responsible for the negligence or misconduct of other partners. This structure is particularly beneficial for professional groups, such as lawyers or accountants, as it allows them to collaborate without exposing their personal assets to the risks associated with the actions of their partners. In contrast, a general partnership does not provide this level of liability protection; all partners share equal responsibility for the debts and obligations of the business. A sole proprietorship is owned by a single individual, who bears full personal liability for all business debts. A general and family partnership also lacks the same limited liability features, meaning partners could still be held personally liable for business obligations. Thus, the registered limited liability partnership stands out as the option that allows for limited liability for specific partners.