technically, a business partnership is created when two or more individuals come together for a specific business purpose. both partnerships and llcs can differ in terms of how profits, losses, and responsibilities are distributed to each participating partner. typically, silent partners are known to only contribute to the business by way of capital infusion—that is, investing money in the business entity—while a general partner is an active manager in business operations. silent partners can also be referred to as limited partners (lps). in a partnership designated as a limited partnership, the liabilities of the silent partner are limited to the amount of money or property that they invest. limited partnership structures include both limited partners and general partners.

if you’re interested in making money by owning a business but have no desire to actually run the business, you could become a silent partner. as a silent partner, you will be responsible for providing capital to the business. the drawback of being a silent partner is that you will have no power in how the general partners run the business. even if you do have voting rights, your vote might not count as much as the general partners’ votes, and you may only be able to cast a vote for certain decisions. for instance, if you have a 10 percent stake in the partnership, that entitles you to 10 percent of the profits and 10 percent of the losses.