Posted in Finance, Accounting and Economics Terms, Total Reads: 412
Definition: Active Partner
An active partner is one who owns a share in the firm’s equity and is actively involved in the operations of the firm. He/She helps run the business to boost in ways to maximize his or her returns and this person generally shares a lot of risk and return compared to a general partner.
As an active partner is more concerned and hence they remain uncovered to unlimited liability in case a company defaults as opposed to a general partner whose liability is merely restricted to their initial investment.
The opposite of an active partner is a silent partner, who only provides cash, credit, machinery, building etc. But their contribution in strategy, management and business is not there. This way a silent partner is not responsible for operations but is a part of the business.