Pennsylvania Uniform Limited Partnership Act

By Erika Waters

The Pennsylvania Uniform Limited Partnership Act provides for the formation of limited partnerships. These partnerships are called "limited" partnerships because they offer limited liability for business losses to some partners. This limited liability makes the limited partnership an attractive business entity to some business owners. Under Pennsylvania law, limited partnerships can be formed by two or more people.

What is a Limited Partnership?

Under Pennsylvania law, a limited partnership must consist of at least one general partner and at least one limited partner. The general partner accepts personal liability for the losses of the business. However, the liability of limited partners is limited to the extent of their original capital investment. The limited partners are given limited liability because they are not involved in the daily activities of the partnership. Rather, the general partners manage the business.

Choosing a Name

Before forming a limited partnership, the partners must select a name for the business. The partnership's name must consist of letters or numbers, and cannot include any symbols. The names of the partners may be used in the partnership's name. Further, under Pennsylvania law, the name of the partnership may incorporate the names of the limited partners without affecting their limited liability. Sections 8505 and 8523 of the Pennsylvania Uniform Limited Partnership Act address the naming requirements for limited partnerships in the state. Before deciding on a name, the partners must check with the Pennsylvania Department of State to ensure the name is not already in use by another partnership.

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Formation

After agreeing to form a limited partnership, the partners must register with the Pennsylvania Department of State by filing a certificate of limited partnership that sets forth the partnership's name and address of its registered office. Additionally, all general partners must provide their name and business address. The limited partners need not be named in the certificate. Further, the certificate may contain other governance provisions agreed upon by the partners, including whether partnership interests will be evidenced by interest certificates. In addition, Pennsylvania law requires limited partnerships to maintain a registered office in the state with a street address; a post office box number is not a sufficient address. The partnership may also maintain offices in other states.

Indemnification

Pennsylvania law also allows partnerships to indemnify partners against business losses and obligations. This indemnification means the partnership will accept liability for losses that would otherwise fall on an individual partner. If a partnership chooses to provide such indemnification, it must include a provision to that effect in its certificate of limited partnership. However, Pennsylvania law prohibits indemnification of a partner if the losses incurred by him were the result of willful misconduct or recklessness.

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Delaware Limited Partnership Law

Limited partnerships, or LPs, are governed by the Limited Partnership Act in Delaware. This act authorizes the formation of a partnership with at least one general partner and additional limited partners. While the general partners remain personally liable for the debts of the business, limited partners are liable only up to the amount of their financial investment. To form, operate or dissolve an LP in Delaware, you must observe all state guidelines and filing requirements.

How to Convert a Sole Proprietorship to a Partnership in Maryland

In many cases, a business gets off the ground with the work of a single owner operating a sole proprietorship. As the company grows and becomes more profitable, additional owners often come into the picture, which can necessitate a restructuring of the business. In Maryland, new business registrations are handled by the Maryland Department of Assessments and Taxation. However, by law, neither sole proprietorships nor partnerships are required to register. Instead, the conversion process is handled through internal partnership agreements and by amending any existing licenses to include the names of the new owners.

Dissolving Limited Partnerships

The laws of each state govern the creation and dissolution requirements of limited partnerships that operate within its jurisdiction. However, 18 states and the District of Columbia follow the Uniform Limited Partnership Act of 2001, thereby creating some uniformity in partnership dissolution rules. If the limited partnership you’re dissolving operates in a different state, the rules are fairly similar but differences may exist. Be sure to research the laws of your own state.

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