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Form Your Limited Partnership

Limited partnerships are partnerships that are formed by two or more persons who choose to operate the business as a limited partnership instead of as a general partnership.

Like corporations, they are formed by filing required documents with the state. A limited partnership must have one or more general partners and one or more limited partners. In a limited partnership, the general partner(s) make decisions and run the business while all limited partners (“silent partners”) do not take part in its operation. General partners are solely liable for the obligations and liabilities incurred by the business, allowing the limited partners to invest in the business without such liability. Protection of limited partners’ personal assets is one of the major reasons business owners choose a limited partnership. Limited partnerships enjoy the same pass through tax treatment as other partnerships.

Why Form a Limited Partnership?

Limited partnerships may be the answer for those who want pass-through tax status without personal liability (for limited partners only) without forming an LLC or S Corporation. Setting up limited partnerships can be expensive and should not be done without consulting with a specialist in this field.

MaxFilings can help you form your Limited Partnership.

Some Points to Consider When Forming a Limited Partnership

  • Official documents must be filed with the appropriate state in order to form a limited partnership
  • State filing fees must be paid
  • There must be one or more general partners
  • The general partner(s) make decisions and operate the business
  • There must be one or more limited partners
  • The limited partners (“silent partners”) do not take part in the operation of the business
  • The general partner(s) are alone liable for the debts, obligations and liabilities of the partnership
  • Limited partners are not liable for the debts, obligations and liabilities of the partnership
  • Protection of limited the partners’ personal assets is one of the major advantages of a limited partnership
  • Unlike corporations, limited partnerships are not required to hold and document meetings
  • Raising additional capital is made easier due to the limited liability of limited partners
  • There is less paperwork and limited partnerships are easier to manage than are corporations
  • Limited partnerships are not themselves taxed so partners can enjoy pass through taxation as do other partnerships
  • Losses can sometimes be used to shelter partners’ other income

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