Business Entities - Limited Partnership

In the state of California, the following are the business entities that are allowed: 

1. Sole Proprietorship
2. Limited Liability Partnership
3. General Partnership
4. Limited Partnership
5. Limited Liability Company
6. Corporations (C-Corporations and S-Corporations)

In the next few blogs, I will be going over the filing requirements for each of these entities, how the entities are created and what forms are required for the entities to file their taxes.  I will also go over the major advantages and disadvantages of each one.  Keep in mind that I am not an attorney, so all I am giving is my opinion.  If you want a legal opinion, please consult an attorney.  I do not dispense legal advice.

Limited Partnership
A California Limited Partnership may provided limited liability for some of the partners.  There must be at least one general partner who acts as the controlling partner and one limited partner whose liability is normally limited to the amount of control or participation of the limited partner.  General partners of a Limited Partnership have unlimited personal liability for the Limited Partnership's debts and obligation.  To form an LP in California, a Certificate of Limited Partnership (Form LP–1) must be filed with the California Secretary of State’s office.

The Limited Partnership files taxes by using the Form 1065 for the Federal Government and a 565 for the state government.  This partnership does have a $800 minimum tax due at the state level.  Each of the partners receives a K-1 with their share of the income/loss which they transfer to their own personal taxes.

The Limited Partnership is a flexible form of business.  It is designed primarily for specific professional services.  The partners decide the structure of the organization and the distribution of profits and losses.  a written partnership agreement is advisable.