Active Partner

DEFINITION of 'Active Partner'

An invested person who is involved in the daily operations of the partnership. An active partner helps run the business to enhance his or her returns and is therefore considered a material participant. This person typically shares more risk and return versus a limited or silent partner.

BREAKING DOWN 'Active Partner'

Because they are actively involved, an active partner is still exposed to unlimited liability as opposed to a silent partner whose liability is only their initial investment. In this arrangement, even innocent active partners can be held responsible if another partner commits illegal actions that involve the firm.

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RELATED FAQS
  1. What is the difference between a silent partner and a general partner?

    Understand the difference between a person designated as a silent partner and a general partner under the partnership business ... Read Answer >>
  2. What are the liabilities of a silent partner?

    Understand the position of a silent partner in a business, specifically how the liability of a silent partner is limited ... Read Answer >>
  3. How are the profits split between a general partner and a limited partner in a real ...

  4. What's the difference between limited liability partnership and general partnership?

    Learn the differences between general partnerships and limited liability partnerships; each type has unique traits, benefits ... Read Answer >>
  5. Can I buy insurance to reduce unlimited liability in a partnership?

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  6. Which terms should be included in a partnership agreement?

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