Active Partner

Posted in Finance, Accounting and Economics Terms, Total Reads: 346
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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.


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