Limited partners have limited liability but general partners have unlimited liability.

Limited partners in a limited partnership are not liable for the partnership's debts and obligations. General partners in either a general or limited partnership are liable for the partnership's debts and obligations. A general partnership is between two or more persons who are actively involved in the management of the partnership. A limited partnership has one or more general partners and one or more limited partners. Only general partners are actively involved in the management of a partnership. General partners are agents of the partnership, and can enter into contracts and carry on the partnership's ordinary business. Limited partners cannot; they are not agents of the partnership.

If you are a limited partner in a limited partnership, you are in the clear. If you are a general partner in either a general or limited partnership, you are subject to potential liability, including for the actions of other partners. If you are a general partner, it is important to file the necessary documents to effect a limited liability partnership (for general partnerships) or a limited liability limited partnership (for limited partnerships).

If you do not know whether your partnership has limited liability or not, it probably does not. You have to take affirmative action with the filing authority in your state to obtain limited liability. Unlimited liability is the default rule for general partners.

If you are in a general partnership, make sure it is a limited liability partnership.

If you are in business with someone else, you do not want to form a general partnership. There is no limited liability for general partners, so you are personally liable for the actions of the partnership. A partnership agreement can be oral, so if you are in business with someone else and making money, you are likely in a general partnership (unless you purposely formed a different business entity).

If you have to be in a partnership, make sure it is a limited liability partnership. As you would guess, you get limited liability.