What is a key benefit of forming a Limited Partnership?

Forming a Limited Partnership provides a significant advantage by allowing for limited liability for some partners. In this structure, there are two types of partners: general partners and limited partners. General partners have management authority and are personally liable for the debts of the partnership, whereas limited partners are typically investors who have only their capital at risk. They are not involved in day-to-day operations, and their liability is limited to the amount they have invested in the partnership. This feature attracts investors who wish to participate in a venture without exposing themselves to the full extent of financial risk associated with partnership debts, making it a compelling option for those looking to invest without taking on personal liability.

In contrast, the other choices do not provide the same benefit as the correct answer. The option stating that all partners are equally liable for debts is inaccurate, as it applies only to general partners and not to limited partners. The assertion that only one partner is required for formation does not reflect the reality that a Limited Partnership needs at least one general partner and one limited partner. Lastly, the option suggesting that it encourages individual ownership does not accurately represent the purpose and functionality of a Limited Partnership, which is more about shared management and investment rather than promoting individual ownership.