Starting a Limited Partnership
If you want to start a limited partnership, you have to make sure that you know the required permits and licenses in your county or state. Seek advice and help of an experienced attorney to address all legal requirements.
Start visiting the agencies today.
When starting any kind of business, it is important that you decide on the right business structure. The reason why many entrepreneurs have hesitations in opening a business is because of the extent of the liabilities. If you want to keep your personal assets safe, it would be best to start a limited partnership. Limited partners will simply provide their share of capital or investment but will not be involved in the management process. You have to obtain the licenses and permits required by your state or local government. Since you’re new to the industry, it would be best if contact SBA (Small Business Administration).
How to Start a Limited Partnership?
You have to obtain an Assumed Name Certificate at the county where the business is going to operate and don’t forget to add the terms ‘Limited Partnership’. For tax purposes, you will need to secure an EIN (Employer Identification Number). All you have to do is fill out the Form SS-4. Visit the Department of Revenue and get an ID number. When you have addressed the legal requirements of the business, you can now write the partnership agreement. This will contain information like asset distribution, profit sharing, dissolution prevention, participation rights, and expulsion/addition of partners, buy-out agreement, and asset appraisal. When creating this document, you have to seek help from a lawyer or attorney.
When you hire an attorney, you can be sure that the agreement is appropriate and will meet the standard requirements. Visit the Secretary of State to obtain your Certificate of Limited Partnership. You need to be aware that the general partners are the only ones who are personally liable for any debts incurred. In the case of limited partners, the extent will depend on their investment value. Partners will be required to report profits and losses on the income tax returns. Once a limited partner plays an active part in management, the treatment of debts will be the same as that of general partners.
It is important that you know the basics of starting a limited partnership. The process is not that complicated. When you seek help from an attorney, you can finish it in no time. The hardest part is creating the agreement and once you’ve addressed it, things will be easier. The government agencies are easily accessible and you can even visit the state website to gather relevant information. Knowledge is power. Make sure that you know what you’re doing so that you can get it right.
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