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Considerations in Forming a Limited Partnership

Considerations in Forming a Limited Partnership

A limited partnership is a specialized form of general partnership. While it is very similar to a general partnership in most aspects, the limited partnership is made up of at least one or more general partners and at least one or more limited partners. The general partners bear 100% of the risk of liability for the debts of the business, the limited partners risk only their capital contributions, and nothing more. Limited partners may not take a role in the management of the business. If they do, they could be found to be general partners and therefore assume unlimited liability for business debts as a general partner. Limited partnerships are attractive organizations for purposes of raising capital. The Limited partners are usually investors who have no particular expertise in the business operations. They are usually investors seeking investment opportunities with the hope of earning a meaningful return on their investment in a successful venture.

Creating a Limited Partnership

A limited partnership can be created only by complying with the Utah Revised Uniform Limited Partnership Act, Chapter 2a of Title 48 the Utah Code. Under Utah law, the general partners must file a "Certificate of Limited Partnership" with the Utah Division of Corporations and Commercial Code. The Certificate must be signed by all of the general partners and must include:

A) The name of the limited partnership.

B) The term of the partnership's existence.

C) The street address of the principal place of business.

D) The name and street address of the partnership's registered agent.

E) The name and street address of each general partner.

F) The signature of each general partner and the registered agent acknowledging acceptance as such.

Optional

G) The specific purpose, but not limited to, for which the partnership is formed.