Florida Partnership Law: Everything You Need to Know
Florida partnership law is governed by Chapter 620 of the Florida statutes. Such laws must be utilized for anyone wanting to establish a new partnership in the state of Florida. 3 min read
Florida partnership law is governed by Chapter 620 of the Florida statutes. Such laws must be utilized for anyone wanting to establish a new partnership in the state of Florida. Under these rules are specific requirements regarding all types of partnerships, including the following:
- Limited partnerships
- General partnerships
- Limited Liability partnerships
- Foreign limited partnerships
By law, all partnerships must be registered with the Florida Department of State and follow all requirements found within Chapter 620. Each section within this chapter provides clear definitions so that individuals who are ready can fully understand the rights and obligations under the law when forming a new Florida partnership. There are various requirements when it comes to the different types of partnerships, including the creation of the business, the paperwork and fees associated with creation, and the ongoing upkeep and maintenance of such partnerships.
Part I of Chapter 620 identifies the requirements for forming a limited partnership. This will include background information regarding this type of business structure, how it is defined, how it exists compared to other partnerships, and any other laws relevant to it. It will also include the requirements for naming, as the business name must include the specific limited partnership designator at the end, e.g. L.P.
Specifically, in order to form a limited partnership, you must file the relevant paperwork and pay the applicable fees associated with it. Furthermore, you must have at least one general partner and one limited partner.
The LP business structure limits the liability of the limited partner but not the general partner. As such, the limited partner has very limited access to the overall daily operations of the business. Rather, the limited partner is usually someone who provides capital to the business. In turn, the general partner is the one with oversight and management capabilities. As its name implies, the general partner has duties for managing the business, and with this includes general liability over the debts and obligations of the business.
This type of business structure is good for those wanting to generate outside investors. Such outside investors will be the limited partners with no need to worry about daily oversight of liability issues. When it comes to tax implications, the LP operates as a pass-through tax entity, meaning that the profits and losses are passed on to the partners who report it on their personal income tax returns.
After the section covering limited partnerships is a section with regard to general partnerships. This will cover all requirements for general partnerships, including formation, paperwork, fees, and dissolution procedures. Particularly, general partnerships are the most informal type of partnership arrangement in the state of Florida.
All partners involved have full responsibility over the operations of the business. Furthermore, all partners are personally liable for the debts of the partnership. This means there is no legal separation between the entity and its partners. Since Florida doesn’t collect income tax from its residents, the profits of the general partnership are reported on each partner’s personal income tax return.
Limited Liability Partnerships
A limited liability partnership, or LLP, is one where each partner is financially and legally responsible only for his own personal actions with regard to the business. Such partnerships are common when liability is common. For example, doctors and lawyers generally form LLPs. Therefore, if one of the doctor’s is sued for malpractice, the LLP will not be affected. Rather, the doctor himself will be responsible. Similar to a general and limited partnership, LLPs also operate as pass-through tax entities.
Foreign Limited Partnerships
Thereafter, Chapter 620 covers foreign limited partnerships, which are those doing business in the state but with a different home state. This might be done if a company transacts some of its business in the state of Florida, and the business needs to obtain foreign qualification in Florida before doing business.
Generally, there is one document that will need to be filled out, and will include:
- Company name
- Principal place of business
- Registered agent
- Type of business structure in the home state
- Ownership information
Thereafter, the Department of State will review the application to determine the validity of the business, and if it can transact in Florida. Note that the certificate of authority that is given can be canceled at any time under certain circumstances.
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