Limited Entrepreneur

Before we get going, we just want to say that a true entrepreneur is limited only by his or her imagination. And maybe their checkbook. But for tax and liability purposes, a “limited entrepreneur” is someone who holds a financial interest in an LLC...but doesn’t actually participate in its day-to-day operations or management.

Limited entrepreneurs are pretty much the same thing as limited partners, but since LLCs don’t have limited partners (because partners = partnership, and partnerships and LLCs are not the same thing), they had to call ‘em something else.

So what does it mean? It means that, in most cases and most states, limited entrepreneurs aren’t on the hook for financial losses incurred by the LLC. There are exceptions, though, so we should make sure we know how our state handles limited entrepreneurs if we’re thinking our LLC might need some.