A Limited Partnership (LP) in Missouri is a type of business entity that consists of one or more general partners who manage the business and are personally liable for partnership debts and one or more limited partners who contribute capital and share in profits. However, they take no part in running the business and incur no liability with respect to partnership obligations beyond their capital contributions.
These are the requirements for forming an LP in Missouri:
Name of the Limited Partnership
The name of your LP must be unique and not easily confused with the name of any other business entity registered in Missouri. For example, if there’s an LP named “Springfield Investments, LP,” you probably wouldn’t be able to register “Springfield Investment, LP.”
You can check the availability of a name by conducting a search on the Missouri Secretary of State’s website. Also, the name must include “Limited Partnership,” “LP,” or “LP” to clearly indicate the type of business entity.
Certificate of Limited Partnership
This certificate is the foundational document of your LP. It includes key details about your business, such as:
- The name of the LP;
- The purpose of the LP. This doesn’t have to be overly specific; a statement such as “to engage in lawful business activities” is typically sufficient;
- The name and address of the registered agent;
- The name and business address of each general partner. For example, if John Doe and Jane Smith are the general partners, their names and business addresses must be included;
- The duration of the LP, if it’s not perpetual. This certificate and the required filing fee must be filed with the Missouri Secretary of State.
Registered Agent
The registered agent is the person or business entity authorized to accept legal documents on behalf of the LP. It is important to note that if your LP is sued, the court papers will be served to the registered agent at the registered office. The agent must be located in Missouri and be available during regular business hours. You can act as your own registered agent, appoint another individual, or hire a professional registered agent service.
Compliance with Tax and Regulatory Requirements
Depending on the nature of your LP’s activities, you may need to obtain licenses and permits. For example, if your LP is a restaurant, you’ll need health permits, liquor licenses, and possibly others. You can check with the Missouri Department of Revenue and your local city or county government to find out what licenses and permits you need.
In terms of tax obligations, your LP may need to register for sales tax, employer taxes, and other state and local taxes. You’ll also need to obtain an Employer Identification Number (EIN) from the IRS, even if you don’t have employees.
What Paperwork Do I Need to Form an LP?
The primary document needed to form an LP in Missouri is the Certificate of Limited Partnership. This document must be filed with the Missouri Secretary of State.
In addition, a partnership agreement is typically prepared. While not required to be filed with the state, a partnership agreement outlines the rights and responsibilities of the general and limited partners, the allocation of profits and losses, and other important matters.
What Benefits Does Missouri Give to an LP?
Here are some of the benefits of an LP in Missouri:
Limited Liability for Limited Partners
One of the key benefits of a limited partnership is the limited liability protection it offers to limited partners. Limited partners, who typically are passive investors, are only liable for the business’s debts and obligations up to the amount of their investment.
For example, if a limited partner invests $50,000 into the LP, that is the maximum amount they could lose if the LP were to go bankrupt or face a lawsuit. Their personal assets, such as their home or personal bank accounts, are generally not at risk. This is a significant advantage over general partnerships, where all partners have unlimited liability for the business’s debts.
Pass-Through Taxation
LPs enjoy pass-through taxation, which means the profits and losses of the LP pass through to the partners’ personal tax returns and are taxed at their individual tax rates. This tactic avoids the “double taxation” that corporations can face, where profits are taxed at the corporate level and then again when distributed to shareholders as dividends.
For example, if the LP makes a profit of $100,000 in a year, this profit is not taxed at the LP level. Instead, it is divided among the partners according to their ownership shares and reported on their personal tax returns. If a limited partner owns 20% of the LP, they would report $20,000 of the profit on their personal tax return and pay tax on it at their individual tax rate.
What Disadvantages Does Missouri Give to an LP?
Below are some of the disadvantages of a limited partnership in Missouri:
Unlimited Liability for General Partners
While limited partners enjoy limited liability, the general partners in an LP have unlimited liability for the business’s debts and obligations. They could be held personally responsible for the full amount of any business debts or liabilities, which could put their personal assets at risk.
For example, if the LP takes out a loan and is unable to repay it, or if it loses a lawsuit and is ordered to pay a large judgment, the general partners could be required to cover these debts out of their own pockets if the LP’s assets are insufficient.
Limited Life
An LP in Missouri may have a limited life, meaning that the LP may be automatically dissolved upon the death or withdrawal of a general partner unless the partnership agreement provides otherwise. This can create instability and uncertainty for the business.
For example, if there are two general partners and one of them dies unexpectedly, the LP might be dissolved, even if the business is profitable and the remaining partner wants to continue it. This is in contrast to corporations and LLCs, which have a perpetual existence independent of their owners.
Should I Hire a Lawyer?
Forming a limited partnership can be a complex process, involving not only the initial formation but also ongoing legal considerations. This is where a business lawyer can provide valuable assistance, and LegalMatch is an excellent resource for finding the right Missouri corporate lawyer for your needs.
Why You Need a Business Lawyer
- Understanding Legal Requirements: A business lawyer can help you understand the legal requirements for forming an LP in Missouri, including the necessary paperwork, naming requirements, and tax and regulatory compliance.
- They can also advise you on the legal implications of various decisions, such as the allocation of profits and losses and the rights and responsibilities of general and limited partners.
- Drafting and Reviewing Documents: Forming an LP involves several important documents, including the Certificate of Limited Partnership and the partnership agreement. A business lawyer can draft these documents for you or review documents you have drafted to ensure they meet legal requirements and protect your interests.
- They can also help you understand the terms of these documents and how they will affect your business.
- Ongoing Legal Advice: Even after your LP is formed, you may need ongoing legal advice. For example, you may need help with contracts, dispute resolution, or changes to your LP structure. A business lawyer can provide this advice and represent your interests in any legal disputes.
How LegalMatch Can Help
LegalMatch is a lawyer referral service that can help you find a qualified business lawyer in Missouri. Here’s how it works:
- Submit Your Case: You start by submitting your case on the LegalMatch website. You’ll provide some details about your legal needs, such as the type of lawyer you’re looking for and the nature of your legal issue.
- Get Matched with Lawyers: LegalMatch will then match your case with business lawyers in your area who have the right experience. These lawyers will review your case details, and if they’re interested in taking your case, they’ll respond to you directly.
- Choose the Right Lawyer for You: You can review the profiles of the lawyers who respond, including their experience, qualifications, and client reviews. You’re under no obligation to hire any lawyer who responds to your case, so you can take your time and make the best decision for you.
LegalMatch can save you time and stress in finding a lawyer. Instead of having to search for lawyers, contact them individually, and figure out whether they’re the right fit, LegalMatch does the work for you and connects you with lawyers who are interested in your case and qualified to help.
