If you are starting a business in Florida, you may have considered forming a limited partnership. A limited partnership is a type of business entity that allows for both general partners and limited partners. In this post, we’ll briefly discuss the basics of limited partnerships in Florida, including what they are, how they are formed, some of their advantages and disadvantages, and more.
Florida limited partnerships and Florida limited liability limited partnerships are governed by the Florida Revised Uniform Limited Partnership Act of 2005 (RULPA), which is Chapter 620, Florida Statutes. A limited partnership is a business entity that has both general partners and limited partners. In a limited partnership, the general partner(s) manages the business and can be personally liable for the debts and obligations of the partnership.
The limited partner(s), on the other hand, generally have limited liability to the extent of its capital contribution and are not involved in the day-to-day management of the business. A Florida limited partnership is required to have at least one general partner.
To form a limited partnership in Florida, a certificate of limited partnership must be filed with the Florida Department of State. This certificate must include certain information such as the name and address of the limited partnership; the name, address and signature of the partnership’s initial registered agent in Florida; the name, address, and signature of each general partner; and the effective date of the certificate, among other information. A certificate of limited partnership may also contain other provisions as long as they are not inconsistent with statutory provisions.
The name of a limited partnership that is not a limited liability limited partnership must contain the phrase “limited partnership” or “limited” or the abbreviation “L.P.” or “Ltd.” or the designation “LP,” and may not contain the phrase “limited liability limited partnership” or the abbreviation “L.L.L.P.” or the designation “LLLP,” as will clearly indicate that it is a limited partnership instead of a natural person, corporation, limited liability company, or other business entity.
Separate from the certificate of limited partnership is the limited partnership agreement. “The partnership agreement governs relations among the partners and between the partners and the partnership.” To the extent the partnership agreement does not otherwise provide, RULPA governs relations among the partners and between the partners and the partnership. While RULPA says a partnership agreement may be oral or may be an implied agreement, it is usually better to have a written partnership agreement.
One advantage of a limited partnership is that limited partners have limited liability for the debts and obligations of the partnership, meaning liability is generally limited to the amount of investment. This means that generally personal assets of the limited partner(s) are not at risk if the partnership is sued. Additionally, limited partnerships are taxed as pass-through entities (unless perhaps they may elect to be taxed as a corporation), which means that the partnership itself does not pay taxes, but the profits and losses are passed through to the partners’ personal tax returns. Also, business decisions may be easier than a general partnership since limited partners are not involved with most decisions.
However, a disadvantage of a limited partnership is that general partners (unless they organize as LLCs) have unlimited personal liability for the debts and obligations of the partnership. This means that generally their personal assets are at risk if the partnership is sued. Another disadvantage is that limited partners typically have less rights to participate in the business than general partners. Also, a limited partnership has a higher formation fee than other entity types that needs to be paid to the Florida Department of State.
In conclusion, forming a limited partnership in Florida can be a good choice for certain types of businesses. However, it is important to understand the advantages and disadvantages of this business entity before deciding. Working with a Florida corporate attorney can assist with that and the legal requirements for forming and operating a limited partnership in Florida. Click here to contact Guala Law Firm.
Peter J. Guala is a business and real estate attorney and mediator in Florida. Peter is the Managing Shareholder of Guala Law Firm, P.A., a Florida law firm with business & corporate, condominium & planned development, and real estate practices as well as effective mediation services. Learn more about Peter and the firm on Guala Law Firm’s website. You can also follow Guala Law Firm on LinkedIn.
