One way to structure a business is a limited partnership (LP). What sets an LP apart from a general partnership is that it has two types of partners: general and limited. General partners are usually in charge of the day-to-day operations and are personally liable for any actions taken by the company. Limited partners are usually not involved with the business and are only liable up to the amount they put into the business. You have to register your LP with the Office of the Minnesota Secretary of State in order to enjoy the benefits of an LP.
Minnesota has a number of requirements that your LP must meet in order to qualify as an LP. One requirement is that it must have a unique name that contains "limited partnership," "L.P.", or "LP". Another requirement for an LP is that there must be at least two partners. One of those partners has to be a general partner, and another partner must be a limited partner. The LP also needs to have an agent for service of process that can be served paperwork in case the LP is sued.
If you have already set up your LP in another state or country, thereby making your LP a foreign LP, then you still have requirements that you must meet in order to do business in Minnesota. The requirements for a foreign LP include obtaining a Certificate of Good Standing from the location where they are originally based and Minnesota tax identification number.
There are two different forms for foreign and domestic (i.e. non-foreign) LPs. Regardless of the form you need to file, you can file your LP with the Minnesota Secretary of State either online or by filling out the appropriate form and sending it in. A domestic LP will need to file a Certificate of Limited Partnership. For this paperwork, you will need to provide the names and addresses of both the business and the agent for service of process. You also have to note that you are intending to register the company as an LP and what date you want the business to begin. Finally, the paperwork needs the name and address of the general partner(s). If you want, at the end of the form, there is a “business snapshot” that you can fill out optionally to provide the state with more information.
Anyone wishing to register a foreign LP in Minnesota will need to complete a Foreign Limited Partnership Certificate of Authority and file it along with the Certificate of Good standing. The Foreign Limited Partnership Certificate of Authority requires a lot of the same information as the Certificate of Limited Partnership, but it does not have a “business snapshot.”
Minnesota is known as a very business friendly state, which makes it attractive to potential LP companies. The state provides a number of tax credits for a variety of different aspects of a business, such as research and development and job expansion.
One of the biggest issues with an LP is that the general partner is entirely in charge of how the business is run. Under Minnesota law, a limited partner cannot do anything on behalf of the LP, or they can be held completely personally liable for any company actions in which they become involved. Also, all LPs, regardless of whether they are foreign or domestic, must file an annual renewal, or they can be dissolved by the state.
It is very important to do everything correctly when establishing a company as an LP because even the slightest mistake can lead to you not having limited liability status for the company’s limited partners. Fortunately, a business lawyer can help you setup your LP and ensure that you do not make any mistakes.