Limited Partnership

Limited partnerships (LP) are a popular business structure for many legal, accounting, and other professional firms. We prepare and file the government paperwork to set up your limited partnership.

What Is a Limited Partnership?

A limited partnership (LP) has one or many general partners and one or many limited partners. LPs are a popular business structure for businesses that work on a project basis for a set period of time, such as real estate investments.

Each general partner has unlimited liability for the debts and obligations of the business, while each limited partner is only liable for the amount they invested in the company.

Limited partners are “silent partners” in that they invest money in the business but do not have voting power or control over management decisions. LPs offer great potential for attracting investment capital by adding investors as limited partners.

What Are the Advantages and Disadvantages of a Limited Partnership?

There are advantages and disadvantages to running a limited partnership, as with any entity type. Before starting a business, you need to be well aware of those factors to know what to expect and what troubles you could run into.

Advantages

  • Limited protection for limited partners. One of the most significant advantages of running a limited partnership is the sharing of responsibility among partners. Limited partners are not personally liable for any debts that the business runs into, and they cannot be held responsible for more than what they contribute.
  • Shared responsibilities. Limited partnerships allow for a distribution of the workload. With partners’ different skills, the workload can be split up, which can result in more effective end results.
  • Generous capital amount. The initial amount of capital contributed for a limited partnership can be substantial. Generous funding can automatically increase the scope of a business.

Disadvantages

  • General partner liability. General partners are held personally liable for debts the business incurs. For example, general partners are at maximum financial risk if a limited partnership goes bankrupt.
  • Agreement breaches. In a limited partnership, every partner’s opinion matters. In the event partners disagree on decisions, disputes could occur. If a dispute results in a breach of agreement, the entire business could be at risk.
  • Limited partners, limited decision-making. Limited partners do not have a complete say in business decisions. Depending on the relationships between the partners, there could be inconsistencies in decision-making.

Appointing a Registered Agent as an LP

Limited partnerships are formed in the state where the partners conduct business. In addition to registering as an LP with the state, you must appoint a registered agent.

A registered agent is a business’s legal appointee to receive notice of lawsuits and other legal or government notices during regular business hours. State law requires every LP to have a registered agent. A registered agent must have a physical office address in the state where you conduct business. The documents they collect are often time-sensitive, so choosing a reliable registered service agent is essential.

Harbor Compliance is also a nationwide registered agent provider. We support your company as it grows, offering local offices with same-day document scanning. Easy online ordering means you have service in minutes. View our service page or contact us for more information.

Contact Harbor Compliance

Harbor Compliance registered agent service provides the forms and filing instructions for your LP. When you work with us, you are immediately granted online access to a registered agent address, and you can expect same-day delivery of your documents. While we handle the registered agent element of your business, so you can focus on meeting your goals and expanding your limited partnership.

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