Active Partner

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Silent Partner

    An individual whose involvement in a partnership is limited to ...
  2. Limited Partnership - LP

    Two or more partners united to conduct a business jointly, and ...
  3. General Partner

    Owners of a partnership who have unlimited liability. A general ...
  4. General Partnership

    A arrangement by which partners conducting a business jointly ...
  5. Limited Partner

    A partner in a partnership whose liability is limited to the ...
  6. Cottage Industry

    A small-scale industry often operated out of a home, rather than ...
Related Articles
  1. Discover Master Limited Partnerships
    Retirement

    Discover Master Limited Partnerships

  2. Looking For Profit In Privately-Held ...
    Fundamental Analysis

    Looking For Profit In Privately-Held ...

  3. Protect Your Personal Assets
    Personal Finance

    Protect Your Personal Assets

  4. Corporate Partnerships That Went Sour
    Personal Finance

    Corporate Partnerships That Went Sour

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center