Creating a Valid Limited Partnership in Texas
Few activities are as rewarding as setting up a new business when you’re ready to start selling your goods or services to the public. However, it’s important to understand the distinct benefits and drawbacks of the various business structures you can choose from. While some people prefer to run a sole proprietorship, others believe they’ll be better served by creating a partnership, limited liability company or corporation. If you’re uncertain which structure may work best for you, it’s important to meet with your Houston business law attorney for early guidance and advice.
This article focuses on the formation of a Texas limited partnership (LP) and how its structure and requirements are unique compared to those of a limited liability partnership (LLP).
How Can Specific Business Structures Affect You & Your Company?
The structure you choose directly bears on the taxes your partnership may have to pay, the paperwork that must be filed with the state before you can begin transacting business, how you can raise money to finance your activities, and your own personal liability for debts owed by the partnership.
How Do Texas Limited Partnerships and Limited Liability Partnerships Differ?
One of the main distinctions between an LP and an LLP is that a limited partnership has only one general partner whose liability is unlimited – and all the other partners have limited liability. As might be expected, the partners assigned limited liability only have limited control over how the company or business is run.
A limited partnership is required to operate in keeping with its oral or written partnership agreement. As is true regarding most business matters, it’s always best to capture any agreement this important in written form. Although you do not have to file a copy of the partnership agreement with the state of Texas, you do need to provide a “certificate of formation” to the Texas Secretary of State’s Office.
Some businesses prefer to limit the general partners’ liability by creating a limited liability partnership (LLP). Those forming this type of business structure must provide the Secretary of State’s Office with a properly completed registration form.
Additional Key Facts You Should Know When Forming a Limited Partnership (LP)
Lawyers in our office are always available to help you determine the best formal structure for your business – and to help you file all required paperwork with the Texas Secretary of State’s Office.
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