Florida business owners can choose from four different types of Florida partnerships. The entity you choose should meet your business needs. All partnerships consist of two or more partners. However, it’s essential to recognize that the partnership type affects the partners’ responsibilities before making your choice. This article looks at the basics of being part of a Florida partnership.
First, Getting Started
The most critical document in any partnership is its partnership agreement. It’s crucial to the company’s success because it sets forth details like:
- Who will manage the company,
- Each partner’s duties and obligations,
- How to handle conflicts,
- Division of ownership, and
- What happens if one partner leaves.
We encourage you to consult with an attorney instead of preparing partnership agreements and other formation documents.
Now, let’s look at the different types of Florida partnership.
#1. The General Florida Partnership
In a general partnership, the partners have some flexibility in how they form and operate their business. Unlike corporations, the partners don’t have to deal with multiple levels of bureaucracy and committees. As long as they agree, they can move forward. Some general partnerships allow either partner to make decisions unilaterally, but this detail can and should be outlined in the partnership agreement.
General partnerships are typically less expensive to form than other entities, like corporations. As for liability, all partners are personally responsible for business liabilities.
#2. Limited Partnership (LP) Is an Option
Although similar to a general partnership, there are significant differences. The primary one is that the Florida partnership has at least one general partner who is expected to:
- Manage the business, and
- Be personally liable for the company’s obligations.
Other partners can be ‘limited’ partners, which means they are accorded liability protection for claims filed against the partnership itself.
The partners will file the appropriate paperwork with the Florida Department of State. You must include the name and business address of each general partner. Also, by law, a Florida partnership that is limited must include “Limited, Limited Partnership, L.P., or Ltd.”
By the way, general partners can be businesses entities in and of themselves. However, any general partners that are not individuals must be organized or registered with the Florida Department of State and must have an active status.
#3. Limited Liability Partnership (LLP)
This type of Florida partnership is organized like a limited partnership, except there is no general partner. Each partner can participate in the company’s operations.
However, the partners have limited liability protection for their personal assets. Generally, each partner is not personally responsible for the partnership’s actions, claims, or debts.
As always, a strong partnership agreement should be in place.
#4. Limited Liability Limited (LLLP)
All the partners in an LLLP enjoy limited liability protection. However, one or more partners can still be called ‘general’ partners with more responsibility for the partnership’s operations. An LLLP typically has more flexibility in operation.
While an LLLP does offer some asset protection, it’s less than the liability protection offered by limited liability companies (LLC) and corporations.
Real estate companies, asset management groups, and car dealerships often form LLLPs.
Does Your Business Fit as a Florida Partnership
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.