A partnership is a type of business arrangement that exists when two or more individuals co-own a business, sharing both profits and losses in the process.
Accordingly, each of the business’s co-owners contributes something to the endeavor (e.g., money, real property, technical knowledge, business experience, etc.).
In this article, you will find a guide about partnership law in Florida.
Partnership Law in Florida – The Essential Elements
Chapter 620 of the Florida Statutes governs all aspects of partnership law. This chapter is split into two different sections, which are:
- Florida Revised Uniform Limited Partnership Act of 2005 (§620.1101 to §620.2205)
- Revised Uniform Partnership Act (§620.81001 to §620.9902)
Each section within Chapter 620 outlines the terms and provisions that individuals involved in partnership business must understand, including all their rights and obligations under the law.
Different types of partnerships have distinct requirements for creation, paperwork, fees, maintenance, and other aspects associated with the business. In Florida, the Department of State is responsible for partnership registration procedures.
Florida General Partnerships
A general partnership is a partnership in which the co-owners of a business equally share the rights and responsibilities associated with the company. Ultimately, there is no legal separation between a general partnership and its co-owners.
Usually, they are referred to as “general partners,” as each partner has the right to act on behalf of all other partners involved. Similarly, each general partner is responsible for the partnership’s debts and obligations.
Chapter 620 of the Florida Statutes has an entire section covering general partnerships, including all related aspects such as requirements to form a general partnership, paperwork, fees, dissolution procedures, and governance.
It is worth noting that general partnerships are the most informal type of partnership in Florida, as they form as soon as two or more business partners start doing business together.
Although general partnerships are not legally required to file a registration with Florida’s Department of State to exist, it is the best approach to officialize the business operations.
Florida Limited Partnerships
A limited partnership is a partnership composed of both general and limited partners. While general partners have direct responsibility for the business’s decisions, limited partners are not directly responsible for the partnership’s decisions and actions.
Hence, limited partners are not responsible for any business-related debts and obligations, as this type of partnership allows partners to determine or limit their share of liability.
While both general and limited partners benefit from profits generated in a limited partnership, only general partners are responsible for the company’s management.
Unlike a general partnership, forming a limited partnership in Florida requires co-owners to file the necessary paperwork with the Department of State.
In terms of taxation, limited partnerships operate as “pass-through entities,” making them similar to Limited Liability Companies (LLCs). Thus, all profits and losses pass through the business entity to each partner’s personal income tax returns.
Florida Limited Liability Partnerships
A limited liability partnership (LLP) is an arrangement in which each partner is responsible only for their own actions regarding the business, either financially or legally.
Traditionally, professionals in segments with high exposure to liability choose to form LLPs (e.g., doctors, lawyers, etc.).
For example, if one of the doctors involved in an LLP faces a lawsuit for malpractice, the business entity is not affected. Instead, the doctor is individually responsible for his actions. In terms of tax implications, LLPs are also “pass-through entities.”
Foreign Limited Partnerships in Florida
Foreign limited partnerships refer to partnerships with a different home state that is doing business within the state.
This type of business partnership has specific requirements, as foreign businesses need to obtain a foreign qualification and meet the required standards before starting to do business in Florida.
To operate in Florida, a foreign limited partnership will have to file the paperwork with the Department of State.
While filling out the forms, partners will have to inform the company’s name, its principal place of business, the type of business structure in the home state, and ownership information.
Plus, they will need to appoint a Florida registered agent, which is designated by a business to receive official legal documents. After receiving the application, the Florida Department of State will review the paperwork to determine the validity of the foreign limited partnership.
Work with an Expert Partnership Law Attorney from Jurado and Associates, P.A.
Waste no time and money with uncertainty. If you need help dealing with partnership law in Florida, call Attorney Romy B. Jurado today at (305) 921-0976 or send an email at [email protected] to schedule a consultation.