Family Limited Partnership Formation

In order to be assured of an airtight limited partnership agreement you require expert legal assistance. Each partner should consult their own personal attorney during the partnership definition phase because conflicts of interest may exist between partners. A LP is formed by filing a certificate of limited partnership, certificate of organization or registration statement with a secretary of state who issues a charter acknowledging the limited partnership's formal existence and, typically, the following information:

• Name of the partnership.
• Address of the partnership.
• Name and address of the general partner(s).
• Name and address of the resident agent.
• General activities or purpose of the limited partnership (some states allow the business to be defined as 'any lawful business which may be conducted by a limited partnership'.
• Stipulated dissolution date.

Some states require additional information however a certificate typically does not list the limited partners nor does the limited partnership agreement become a public record. Once a certificate of limited partnership has been filed and approved the general partner should immediately apply to the IRS for an employer's identification number (EIN). A LP is a new entity so it requires a unique EIN and, subject to the laws of the state of organization, possibly a state ID number.

After a limited partnership obtains its taxpayer ID number it should open its own bank accounts and set up its own recordkeeping, noting that funds and other assets belonging to the limited partnership must be kept separate and apart from any individual investor or partner funds—as well as funds belonging to other entities. Any commingling of these assets can diminish the view of a court as the LP being a separate legal entity apart from its owner(s).

Separate bank accounts and financial records that clearly show a distinction between the limited partnership and its partners is essential. A part-time bookkeeper or accountant can easily set up a convenient accounting and tax system for any partnership.

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