Limited Entrepreneur

AAA

DEFINITION of 'Limited Entrepreneur'

A person who is involved in a limited liability company but does not actively manage it. One benefit of being a limited entrepreneur is not having to pay self-employment tax. LLC owners must be careful to not allocate more than 35% of the LLC's losses to limited entrepreneurs, otherwise the LLC would be classified as a syndicate and face different tax treatment.

INVESTOPEDIA EXPLAINS 'Limited Entrepreneur'

Limited partners are similar to limited entrepreneurs in that they also do not play an active role in a company's management and cannot be held responsible for any debts the company incurs. This means that any income or losses they receive from the business are usually considered passive for tax purposes.



RELATED TERMS
  1. Silent Partner

    An individual whose involvement in a partnership is limited to ...
  2. Inventrepreneur

    A type of entrepreneur who seeks to market or produce an invention ...
  3. Lipstick Entrepreneurs

    Independent, self-employed businesswomen who sell makeup or other ...
  4. Limited Partner

    A partner in a partnership whose liability is limited to the ...
  5. Limited Liability Company - LLC

    A corporate structure whereby the members of the company cannot ...
  6. Passive Loss

    A financial loss within an investment in any trade or business ...
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. Asset Protection For The Business Owner ...
    Options & Futures

    Asset Protection For The Business Owner ...

  4. What's The Best Franchise Investment ...
    Investing Basics

    What's The Best Franchise Investment ...

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center