A limited partnership (LP) is a way to organize your business to protect one or more of the partners’ assets. With an LP, the limited partners are only liable in lawsuits or debts up to the amount they put into the business. This is why many people prefer to create an LP instead of another type of business structure. However, limited partners are prohibited from being involved in the day-to-day operations of the company. Instead, that is left to the general partners. In order to make your business an LP, you will need to register it as such with the Delaware Division of Corporations.
An LP needs to have two or more owners, also known as partners. At least one of these partners must be a limited partner, and one must be a general partner. You must also find a registered agent who can receive important legal documents for the LP. The agent may be a resident of the state or another company. Finally, you must select a name that is not already being used by another company and must include “L.P.”, “LP”, or “Limited Partnership.”
You can register your company as an LP in Delaware by simply mailing in or faxing a completed Certificate of Limited Partnership form to the Delaware Division of Corporations. The form is very short and does not require a lot of information. The information it does require includes the name of the business and the office address. You also need to list the names and addresses of the registered agent and the general partner(s).
Delaware is generally a very business-friendly state and provides a lot of incentives for incorporation in the state. One benefit is that the state has a specialized court devoted entirely to only business matters called the Court of the Chancery. Along with a specialized court that favors businesses, the corporate laws in Delaware also heavily favor businesses over individuals.
If you form an LP in Delaware, you have to pay an annual franchise tax. This tax is $300 and must be paid on or before March 1st each year.
You may need to consult with a Delaware business lawyer when forming an LP in Delaware. They can help you with the process and make sure that you avoid any common pitfalls.