Limited Partnership (LP)

This business organization structure type is a combination of general partners and limited liability partners. In this structure the general partners have the rights, responsibilities, power and liabilities granted in a general partnership, where limited partners do not participate in the day-to-day management or operation of the business. Simply doing business does not form limited partnerships; filing a registration with the appropriate state office forms them.

Many states restrict names selection of the limited partnership and require filings for all amendments and certificate cancellations. States also require the appointment of a register agent so that the service process is available should the need arise.

Pros to Limited Liability Partnership:

• Shields partners from LLP’s debts and obligations.
• Partners have complete control regarding decision-making.
• Partners own agreed upon amount of all of the profits.
• Partners own agreed upon amount of all of the assets.

Cons to Limited Liability Partnership:

• Business life may be limited based on partnership agreement.
• Funding is limited to consumer loans and personal savings of the partners.

• Partners are responsible for all day-to-day operations.

Tax Implications

• Partners will pay self-employment tax on the income they receive from the business.