Incorporate today as easy as 1-2-3  

FAQ’s





LP

  1. What types of businesses are organized as limited partnerships?
    Most businesses can be organized as limited partnerships.  However, limited partnerships are most commonly used for businesses that have been formed for the purposes of investing in real estate.


  2. What is a family limited partnership? 
    A family limited partnership is a limited partnership that is used to hold title to family assets (for example, real estate), a family business or investments.  All family members could be partners in the limited partnership or the parents could be the initial partners and, over time, gift limited partnership interests to their children (or other beneficiaries).  Family limited partnerships often are used to minimize estate taxes since partnership interests can be transferred between generations (for example from parents to children) at lower tax rates than would apply if there were no limited partnership. For estate and gift tax purposes, the valuation of assets held in a family limited partnership may be discounted for valuation purposes and, therefore, less estate or gift tax may be incurred.


  3. Once I form my limited partnership are other companies prevented from using my company’s name?
    No.  It is still possible for another company to use your company’s name.  The best way to protect against someone else using your company’s name would be to get trademark protection of the name.  A and A Incorporating Services offers trademark services.


  4. What’s the difference between a limited partnership and a general partnership?
    A general partnership is a business arrangement between 2 or more people.  A partnership is created by default when 2 or more people are engaged in business but have not formed another entity, such as a corporation, an LLC or a limited partnership.  In a general partnership, every partner has the ability to actively manage and control the business and each partner also are responsible for all of the debts and liabilities of the partnership.  There is no limit to this exposure for the debts and liabilities of the partnership.  Personal assets of the partners may be used to satisfy business debts and liabilities if necessary.  A limited partnership, on the other hand, provides protection for the limited partners of the limited partnership from the debts and liabilities of the limited partnership. A limited partnership must have at least 2 partners, one general partner and one limited partner.  Unlike the limited partners, general partners of a limited partnership are responsible for the debts and liabilities of the partnership.  Personal assets of the general partners may be used to satisfy business debts and liabilities if necessary.  The general partner(s) of a limited partnership are responsible for operating and managing limited partnerships.  Limited partners typically are silent investors and do not get involved in operating or managing limited partnerships.  In most States, unlike a general partnership, to form a limited partnership Articles or a Certificate of Formation must be filed with the State (usually the Secretary of State’s office) in order to form a limited partnership.  


  5. What is a Limited Liability Limited Partnership or LLLP? 
    A limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership. Similar to a limited partnership, the LLLP consists of one of more general partners and one or more limited partners. The general partners manage the business operations of the LLLP, while the limited partners typically only maintain a financial interest. The key advantage of this form of ownership is that the general partners receive limited liability on the debts and obligations of the limited liability limited partnership.  Limited liability limited partnerships often are used for investment in real estate, although it also is available for other businesses.  Not all States permit the formation of limited liability limited partnerships.  Many require the formation of limited partnerships first, then registration of that limited partnership as a limited liability limited partnership.  Some of the States in which an LLLP can be formed are Arizona, Colorado, Delaware, Florida, Georgia, Nevada and Texas.  


  6. I just formed a new limited partnership.  Why do I need a Limited Partnership Agreement? 
    If the partners do not enter into a limited partnership agreement, then the relationship between them, and their respective rights, obligations and duties will be unclear.  Should a dispute arise between the partners in the future, without a limited partnership agreement, it will be difficult for the parties, a court or other trier of fact to determine the rights, obligations and duties of the parties.  This could lead to time-consuming and costly litigation.  Typically, a limited partnership agreement will address such topics as identification of the partners, required contributions to the capital of the limited partnership, how the profits of the partnership will be distributed to the partners, how the income and loss of the partnership will be allocated to the partners, dissolution of the limited partnership, restrictions on transfer of partnership interests, etc. 


  7. Which States have the best overall business tax climates?
    South Dakota, Nevada, Alaska, Florida, Montana, Texas, New Hampshire, Oregon and Delaware (according to “2009 State Business Tax Climate Index”, The Tax Foundation, October 2008, based on corporate tax rates, individual income tax rates, sales tax rates, unemployment insurance tax rates and property tax rates).

  8. Which States have the worst overall business tax climates?
    New Jersey, New York, California, Ohio, Rhode Island, Maryland, Iowa, Vermont, Nebraska, Minnesota (according to “2009 State Business Tax Climate Index”, The Tax Foundation, October 2008, based on corporate tax rates, individual income tax rates, sales tax rates, unemployment insurance tax rates and property tax rates).

  9. Which States have no personal income tax?
    Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming (according to “Business  Tax Index 2008”, Small Business & Entrepreneurship Council, April 2008).

  10. Which States have the highest personal income tax rates? 
    California, Vermont, Oregon, New Jersey, Maine, Washington D.C. and Hawaii (according to “Business Tax Index 2008”, Small Business & Entrepreneurship Council, April 2008).

  11. Does a Limited Partnership need a Federal Employer Identification Number (EIN)? 
    Unless the limited partnership does not engage in any business activities and does not file any tax returns then all limited partnerships should obtain an EIN.  In addition, most banks will require an EIN in order to open a bank account for the limited partnership and other business partners or vendors will require an EIN in order to do business with the partnership.


  12. I live in Texas and own want to purchase real property in California.   Can I form a limited partnership in California in order to purchase the real property?
    Yes.  You do not have to live in the State in order to form a limited partnership in that State.