Forming a limited partnership can be a great option for entrepreneurs or investors who want to have an interest in a business, but do not participate in its daily operations. However, the process of forming a limited partnership is much more difficult than forming a general partnership.
In this article, you will find out how to form a limited partnership in Florida.
Limited Partnership vs General Partnership – An Explanation
Business partners in a general partnership have even profit distribution and are exposed to the same level of liability. Hence, general partners are personally liable for their business’s debts and other liabilities.
In a limited partnership, there is at least one general partner and one limited partner. Limited partners have no responsibilities in terms of decision-making and management, as they are only passive investors.
Instead, their liability is limited to the amount of money they invested in the business. For instance, if a limited partner invests $100,000 in a limited partnership, the amount invested represents the extent of their interest in the company.
Accordingly, if a creditor files a lawsuit against the partnership and wins in court, the limited partner cannot lose more than $100,000 – even if the business is liable for millions of dollars in debt.
Do Limited Partnerships Require a Formal Business Structure in Florida?
A general partnership forms by default when two or more business partners start making business together. On the other hand, the State must recognize limited partnerships.
Forming a limited partnership requires entrepreneurs to file the formation documents with the State of Florida and pay the required formation fee.
How to Form a Limited Partnership in Florida – Step-by-Step
Registering an LP Name in Florida
While Florida general partnerships can operate under the individual names of the partners involved in the business, limited partnerships must have their own business names. All limited partnerships formed in Florida must include “limited partnership,” “limited,” “Ltd.,” “L.P.,” or “LP.” in their business name.
Additionally, limited partners cannot include words that refer to other business structures (e.g., corporation, incorporated, etc.), and or words to refer to specific business segments (e.g., bank, law office, etc.).
We recommend you check whether or not the desired business name is available at Florida’s Division of Corporations’ business name database. If the desired name is available, it is possible to officially register it with the State of Florida.
Proceeding with the Specific Business Formalities
As provided by Florida’s Secretary of State, a limited partnership must designate and continuously maintain a designated office and a registered agent in Florida. State law provides that a registered agent is a party responsible for the “service of process upon the limited partnership and a registered office, which shall be the address of its registered agent.” Hence, limited partnerships without a registered agent within the state can lose their good standing, which means the state can proceed to dissolve the limited partnership if they decide to do so.
Filing Certificate of Limited Partnership with the State
Then, it is time to officially form and register the limited partnership with the State of Florida, which begins by submitting a “Certificate of Limited Partnership.” This document must include specific information about the partnership and its partners, such as:
- The name for the Limited Partnership
- The address of the Limited Partnership’s initially designated office
- The mailing address of the designated office
- The name and address of the chosen registered agent
- The registered agent’s signature
- The name and address of each partner involved in the business
- The date when an agreement starts to operate (effective date)
- Each general partner’s signatures
Submitting the Forms
In Florida, you can either file a Certificate of Limited Partnership online or file out and mail the forms. Typically, the filing fee to form a limited partnership is $1,000, with additional fees if you require a certified copy of other documents.
Usually, the processing time will depend on the method used to file the paperwork. Filing the Certificate online usually takes 2-3 business days for processing, while filing by mail takes 3-5 business days for processing.
Nonetheless, processing times may increase during periods with a high filing demand.
How to Form a Limited Partnership in Florida – Work with Jurado and Farshchian, P.L.
There are several other aspects regarding a limited partnership in Florida, including drafting a limited partnership agreement, handling taxation requirements, and much more.
Ultimately, the best approach is to work with an expert business attorney to guarantee a smooth experience when forming a limited partnership. Call Attorney Romy B. Jurado at (305) 921-0976 or send us an email at [email protected] to schedule a consultation.