Texas Limited Partnership Agreement

By Jim Thomas

A limited partnership is one type of business entity that can be set up in Texas. Although the partnership does not require a filing in the public record, The Copp Law Firm in Dallas says you are required to submit a certificate of formation to the Texas Secretary of State's office. There are a number of advantages to forming a limited partnership, in particular the ability to shield the limited partners from personal liability as well as potential tax savings.

Definition

A Texas limited partnership consists of an agreement between at least two partners, one of whom must be designated as a general partner and another designated as a limited partner. The general partners control the operation of the business on a day-to-day basis. Members of the board of directors can retain their limited partner status if they don't assume such control.

Liability

As stated by the Law for Change website, the general partner or partners have unlimited liability for the debts and obligations of the partnership to third parties. Outside creditors can go after the personal assets of the general partners. On the other hand, the personal assets of limited partners are protected from third-party actions, although a limited partner is liable to the general partners for contributions he agreed to make to the general partners under the partnership agreement.

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Taxes

Limited partnerships that meet certain criteria related to limited liability, including centralized management and an ability to transfer ownership interests, can qualify as "pass-through" entities for tax purposes. This enables the partners to avoid taxation on the partnership itself. As the QuickMBA website notes, in a limited partnership "income can be allocated each year among the partners in a way that minimizes taxes." However, if your partnership doesn't meet the criteria, it will be taxed as a corporation.

Formation Requirements

The general partner submits the certification of formation, which includes the name of the limited partnership, the address of the partnership's registered office in the state, and the names and addresses of all general partners. The name of the partnership must contain the words or abbreviations of "limited" or "limited partnership." The partnership operates under the provisions of the partnership agreement, which can be written, oral or implied. It also can be revised by the partners.

Considerations

While the TBOC has no formal record-keeping requirements, the general partners are obligated to give limited partners certain information, such as the status of the business and the financial condition of the limited partnership. So they need to keep such records in case of a dispute between the general and limited partners.

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References

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Michigan Business Partnership Laws

Michigan has adopted the Uniform Partnership Act and Revised Uniform Limited Partnership Act, located in Chapter 449 of Michigan Codified Law along with several other partnership act provisions. This Act addresses a wide range of partnership issues, such as the types of partnerships available in Michigan, establishment of a partnership, winding up a partnership, and the rights of partners. Attorneys, online document preparation websites, and Michigan’s Bureau of Commercial Services offer assistance for persons wanting to establish partnerships under Michigan law.

How to Obtain a Legal Separation in Maryland

In Maryland, a "limited divorce" is the equivalent of a legal separation in many other states. A limited divorce will allow you and your spouse to negotiate many of the legal issues relevant to ending a marriage, but a judgment of limited divorce will not allow you to remarry. Some couples choose limited divorce because they do not yet meet the requirements to obtain an absolute divorce, which permanently ends a marriage and allows remarriage to others. However, you can also choose limited divorce if you do not intend to get an absolute divorce in the future.

California General Partnership Law

The law defines a general partnership as an association of two or more persons who carry on business with the aim of making profit. The term “persons” generally includes not only individuals, but also other business entities. Most partners sign a formal partnership agreement, setting out their respective rights and obligations; however, this isn't necessary, as a partnership can operate on nothing more than a handshake. Title 2 of the California Corporations Code sets out the law relating to general partnerships in the state.

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