By Mark Oldberg: September 9, 2015: Blog
When you decide to start a business one of the first things you must decide is what legal structure your business will utilize. There are many different choices for legal entity and even some special ones if you are a certain kind of business.
Part 3 is closely related to Part 2. Part 3 will cover limited liability partnership models.
The Limited Partnership is much like the General Partnership with the addition of passive investors. The passive investors are the Limited Partners. Limited Partners do not have an integral role in the day-to-day decision making of the business and their liability is "limited" to the amount contributed to the business. A Limited Partnership still has General Partners who are in charge of running the business on a daily basis. These General Partners still have unlimited liability.
Limited Partnerships must file a Certificate of Limited Partnership with the State Corporation Commission (or Secretary of State depending on your state).
If you must go the partnership route (I prefer the LLC), the Limited Liability Partnership (LLP) is the way to go. The LLP has the same model as the Limited Partnership (limited and general partners) except the general partners in an LLP also have liability protections. In my opinion it is a huge mistake to not form your partnership as an LLP. If a lawyer suggested either a general partnership or a limited partnership instead of an LLP I would say he/she is bordering on malpractice. It is generally easy and inexpensive to form your business as an LLP, so you should do it and get the protections.
To create an LLP you must file a Statement of Registration as a Virginia Limited Liability Partnership with the State Corporation Commission (or Secretary of State depending on your state).
While it isn't required by Virginia law, it is a really good idea to create a written Partnership Agreement. All of your important agreements should be in writing and that should start with the agreements decided between the partners on how the business will operate.
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