If you want to formally organize your business, you have several options in terms of business structures. These include such business forms such as an LLC, a sole proprietorship, or a limited partnership (LP). The main benefit of a limited partnership is that it allows for certain partners to enjoy limited liability in exchange for giving up the right to directly manage the company. These partners are known as limited partners.
General partners, who are the other type of partner in an LP, are held personally liable for all of the LP’s actions, ase they are in control of the company’s daily operations. Nebraska requires that LPs be registered with the Nebraska Secretary of State.
For your company to operate as an LP in the state of Nebraska, it must have at least one general partner and one limited partner. Nebraska also requires the LP’s name to include the terms “limited partnership,” “Ltd.”, “L.P.”, or “limited”, while leaving out the name of any of the LP’s limited partners. In addition to choosing a proper business name, an LP also has to choose an agent for service of process that can receive paperwork and documents for the company. This agent can be an individual person who lives in Nebraska, a business operating in Nebraska, or a business that has authority to operate in Nebraska.
In Nebraska, the only way you can file the required paperwork is by mailing it into the Office of the Nebraska Secretary of State. LPs that are created in Nebraska, are called domestic LPs. For these, you will need to file a Certificate of Domestic Limited Partnership. There is no pre-existing form available online for a Certificate of Domestic Limited Partnership. Instead, you will need to create your own form by looking at the applicable law for guidance. The information you need to include in your certificate is the name of the LP, the company’s office address, and the name and address of your agent for service of process. You must also include any other governing provisions you want to add, and the signature(s) of the general partner(s) as well.
You will need to file different paperwork if you have already formally established your LP in another state or country and you now want to now operate in Nebraska. These types of LPs are called foreign LPs. Unlike the paperwork for a domestic LP, there is a pre-existing form to fill out for the foreign LP’s paperwork. That form is called is a Registration of Foreign Limited Partnership to Transact Business. With this document, you need provide the name of the LP, the state and date when the LP was first created, the LP’s office address, and the name and address of the registered agent. You will also need to list all names and addresses of the general partners.
To be more attractive to new businesses, including new LPs, the state created the Nebraska Advantage Package. This system is friendly towards companies as it provides many different tax credits, such as research and development credits and microenterprise credits. The package also provides sales tax refunds and exemptions from some local sales tax requirements.
Besides these specific benefits, a main benefit of limited partnerships in general is that they are less likely to dissolve than a normal partnership. Under the laws governing LPs, limited partners can withdraw or terminate their role as partner, without it resulting in a permanent dissolution of the business as a whole. These is usually possible because the limited partners usually do not take a major part in the company’s management or leadership. This is a valuable benefit that can allow for changes to be made in the long run without putting a permanent stop to business operations.
Also, the limited partners can sometimes adjust their role if they begin to be more active in the company’s management. Here, they may function more like a general partner rather than a limited partner.
One aspect to consider when establishing your LP in Nebraska is that Nebraska has one of the highest state personal income tax rates. This is because profits of an LP are taxed through each partner’s personal income tax, rather than as a separate entity. Additionally, Nebraska’s income tax has no standard deduction or personal exemptions.
Lastly, while the termination or withdrawal of a limited partner will not dissolve the business, it can still result in various types of legal issues or disputes. In order to avoid a violation or conflict, it may be necessary to review the partnership agreement to determine what the consequences or results of such situations might be.
When creating a LP you must make sure you are following all the regulations required by the state or you may lose the benefits of the LP. Thus, having the assistance of a Nebraska business lawyer while setting up your LP can be crucial.