Gain direct access to income and expense flow by investing in limited partnerships (LPs). As an investor, you can maximize your interest in a business without having to take on the risks or taxes associated with the business.
Avoid business taxes through limited partnerships.
Earn dividends without the business risk.
Protect your assets with certain provisions.
In business, there are usually many partners that work to make it a success, including general and limited partners.
General partners are the individuals who work on a day-to-day basis to manage the business and its operations.
Limited partners are individuals who invest in the business but do not handle any of the management responsibilities. These investors are only liable to the extent of the money they have invested.
When a business opens itself up for limited partnerships, individuals have the option to use their self-directed IRA funds to invest in the business. When you invest in a limited partnership, you are purchasing limited partnership units (LP units). Tax rules and characteristics of LP units differ from stocks.
There are a few other types of limited partnerships, including:
If a business goes bankrupt or is sued, a limited partner is only responsible for their own investment and nothing else.
Limited partners can be a valuable source of capital investment, and are a chosen method of organization for many law, accounting, or finance firms. A limited partner’s income is not taxed at the business level, but rather passed through for personal tax reports.
A company can also have more than one limited partner, allowing it to generate more capital investments.
When an IRA invests in a partnership and becomes a limited partner, the partnership pays dividends directly into your IRA account. These dividend distributions are required on a regular basis for business tax purposes.
The IRA can be used to buy and sell stock directly from and to the partnership itself. In certain situations, you may be eligible for unique tax advantages within this partnership, like business tax deductions for investment expenses for example.
We encourage our investors to do adequate research or contact a broker/financial advisor, attorney or CPA, to determine if an Limited Partnership is an appropriate investment.
Once you have determined that a limited partnership is suitable for you, it can be purchased with your Self-Directed IRA or another retirement account at Mainstar Trust. Click here to find out how to use a Mainstar Trust account to invest in an LLC.