A limited partnership (LP) is a way to organize your business that protects a certain type of partner called a limited partner. This type of partner has limited liability in the event that the LP incurs a debt or is sued because they are not heavily involved with the LP’s operations. The other type of partner is a general partner. Anyone who is a general partner is personally liable for the LP because they are in charge of the operations of the LP. For an LP to be valid in Washington, it needs to be registered with the Washington Secretary of State’s Office.
There are a handful of requirements that Washington mandates of an LP. The name of your company must contain one of the following:
- Limited Partnership
A registered agent who can accept service on behalf of the company must be chosen. The registered agent can be an individual living in Washington or a company registered to do business in the state, but there must be Washington address for the registered agent. Also, LPs have to have at least two partners, with one being a general partner and one being a limited partner.
All of the forms are available online, and you can send them in through the mail. You also have the option to complete and file the paperwork online. There are different forms for domestic and foreign LPs, so be sure to file the correct one. Domestic LPs are companies that are being created for the first time in Washington. Foreign LPs are companies that were originally started in another state and are now seeking to do business Washington.
The form needed for a domestic LP is the Certificate of Limited Partnership. In order to complete a Certificate of Limited Partnership, you have to include the addresses and names of the LP, the general partner(s), and the registered agent. You also need to indicate when you want the LP to commence. Additionally, you will need to get the signatures of both the agent and all of the general partners.
For foreign LPs, the necessary form is the Foreign Limited Partnership Registration. With this form, you need to include the all of the same information requested by the Certificate of Limited Partnership, as well as additional information. You will also need to list if the company will operate under a different name in Washington, the date when the LP was originally established, and the location where the LP was originally formed. Along with the Foreign Limited Partnership Registration, you will need to file a Certificate of Existence from where your LP was first registered.
Washington does not have a personal income tax. Since the profits of an LP are taxed through each partner’s personal income tax, the partners of a Washington-based LP do not have to pay any state taxes on the profits.
There are two business taxes that Washington charges: a Business & Occupation Tax and a Combined Excise Tax. Businesses in the state have to pay one of these two taxes, depending on what industry in which they are involved. Also, every LP in Washington is required to file an annual report and pay a $60 filing fee.
Setting up an LP can be difficult, but speaking with a Washington business lawyer will make the process easier. A lawyer can guide you through the paperwork and answer any questions that may arise.