A limited partnership has one or more “limited partners” and one or more “general partners.” Limited partners are individuals who do not participate in the control of the limited partnership and who are not generally personally liable for the debts of the limited partnership. General partners are individuals who actively participate in the control of the limited partnership and who are fully liable for the debts of the limited partnership.
Limited partnerships are generally required to utilize a limited partnership agreement. Although such an agreement can be oral, we strongly recommend that the agreement be written. Like a general partnership, the limited partnership is generally not subject to federal or California income tax. Most limited partnerships choose to be taxed as general partnerships, where each individual generally pays taxes on his or her income from the limited partnership. A limited partnership is also subject to an annual franchise tax fee imposed by the State of California.
At Porter Law Group, we’ll help you analyze your business and personal needs, explain the pros and cons of various alternative structures, and help you decide which business structure may be best for you. We will help you move your business forward with timely and valuable legal guidance.