A limited partnership is a specific type of business partnership that enables each partner to achieve legal protection against individual liability for the debts, losses, and violations related to the overall partnership. Limited partnership are different differs from other partnerships since it allows all partners to have limited liability. This limited liability depends on the individual partner’s investment contribution to the business. In addition, one or two partners known as general partners run a limited partnership venture.
Limited partnerships are knows as partnerships in commendam in Louisiana and the partners are considered special class of partners since they are known to be “limited partners”.
The Louisiana Civil Code article 2836 governs limited partnerships. To form a limited partnership in Louisiana, a written contract for the limited partnership must be filed with the Louisiana Secretary of State. The written contract must contain:
- Name for the partnership that clearly identifies limited partnership
- The address of the limited partnership’s principal place of business
- Names and addresses of all partners in the limited partnership, and a statement indicating their status as in limited partnership
- The name and address of at least one general partner; and
- A statement of contribution or agreed contribution, of each partner in the limited partnership
To form a Louisiana Limited Partnership, the partners must file a document, and pay a filing fee, with the Secretary of State called “Certificate of Limited Partnership”. The certificate must state the following:
There are several benefits of having a limited partnership in Arizona. These benefits are:
- Limited Liability: Limited partners who form an LP and contribute money only face limited liability. This means that if the business goes bankrupt, the limited partners would only be liable up to the amount of money they invested or contributed to the business and nothing more.
- Tax Benefits: The profits and losses in an LP flow through the business to the partners, all who are taxed on their personal income tax returns and get to share the profits and losses.
- Less paperwork: An LP has less paperwork than formation of a corporation.
Limited partnerships in Louisiana do have some disadvantages. Some of these are that limited partnerships have less of a say in the business than the general partners. If they begin to become active in the LP, the general partners see this as a risk. In addition, unlike the general partners in the business, limited partners income are not considered for tax purposes so they usually have to pay self-employment tax.
The law surrounding the requirements and protection of limited partnerships are complicated. The facts of each case and limited partnership can be unique. Limited Partnership laws can vary from state to state. It’s in your best interests to hire local Louisiana business lawyer if you need help with the limited partnership laws in your area. Your attorney will be able to assist you with tasks such as filing, creating documents, and negotiating partnership agreements.