Commonly used in real estate ventures, a limited partnership has a general partner that assumes all personal liability for the business. A limited partner (or partners) is simply an investor in the business, with no personal financial obligations or liabilities. In "silent partner" setups, the general partner has control over operating the business, and the limited partners simply provide financial backing. Either way, if someone sues the partnership, only the general partner's personal assets can be touched.

Excerpted from Starting a Home-based Business