A limited partnership is a type of partnership in which the limited partners share in the partnership’s liability only up to the amount of their investment in the limited partnership. Under Minnesota’s Uniform Limited Partnership Act, the limited partnership must have at least one general partner and one limited partner. The general partner has the right and responsibility to control the limited partnership, and is responsible for the debts and obligations of the limited partnership. The limited partner, in exchange for limited liability, generally does not participate in the day-to-day management and control of the business.
As is the case with general partnerships, a limited partnership will need to obtain business licenses if necessary, obtain federal and state tax identification numbers and may need to register the business name as an assumed name. A limited partnership that will hire employees, even if those employees are members of a partner’s family, must obtain an unemployment insurance employer account number and worker’s compensation insurance for those employees. The limited partnership must file a certificate of limited partnership with the Secretary of State before commencing business. The filing requirements are discussed in the next section.
A limited partnership that will be selling shares in the limited partnership to the public likely will be required to register with the federal Securities and Exchange Commission and the Minnesota Department of Commerce. Persons contemplating such an offer or sale should consult with legal counsel well in advance of the offering to assure that it complies with federal and state securities laws.
Certificate of Limited Partnership
A limited partnership must file a certificate of limited partnership with the Secretary of State. Minnesota Statutes § 322A.11 sets forth the minimum content requirements of the certificate. A form containing these requirements is available from the Secretary of State website at www.sos.state.mn.us/index.aspx?page=331 or by fax from the Fax Forms library at (651) 296-2803 or by mail from the office. A limited partnership is formed at the time the certificate of limited partnership is filed with the Secretary of State or at a later time specified in the certificate.
In addition to the certificate of limited partnership, the limited partnership may also adopt a limited partnership agreement. As is the case with a general partnership agreement, the limited partnership agreement governs the details of the partnership and the management arrangement between the general partners and the limited partnership. Issues and concerns to be addressed in the limited partnership agreement as well as consideration of securities law requirements and tax consequences should be discussed with legal counsel.
In order to become a limited liability limited partnership, the first step is to establish the limited partnership, second, it is necessary to follow the procedures required for creating a limited liability partnership described in the preceding sections of this Guide. It is recommended that the name of the limited partnership and the name on the limited liability limited partnership registration match so that there is no question whether the limited partnership entity has elected limited liability partnership status.
A limited partnership that does business in Minnesota and is formed in another state or country must register with the Secretary of State as a foreign limited partnership. Filing requirements are established by Minnesota Statutes § 322A.70. A registration form containing the required information is available from the Secretary of State by mail, fax, or from the website. The foreign limited partnership must attach to its registration a certificate of good standing (sometimes called a certificate of status) from the state or province where the foreign limited partnership is formed.
A foreign limited partnership also must obtain a Minnesota tax identification number. If the foreign limited partnership has employees, even if those employees are members of a partner’s family, it must obtain an unemployment insurance employer account number and workers’ compensation insurance covering its employees.
CREDITS: This is an excerpt from A Guide to Starting a Business in Minnesota, provided by the Minnesota Department of Employment and Economic Development, Small Business Assistance Office, Twenty-eighth Edition, January 2010, written by Charles A. Schaffer, Madeline Harris, and Mark Simmer. Copies are available without charge from the Minnesota Department of Employment and Economic Development, Small Business Assistance Office.
This post is also part of a series of posts on forming a business in Minnesota.