Key Takeaways

  • A general partnership in Missouri is the default arrangement when two or more people operate a business together without registering another entity, and partners are personally liable.
  • Missouri allows partnerships to register as limited liability partnerships (LLPs), which give all partners liability protection while preserving flexible management rights.
  • LLPs must file an application with the Secretary of State and renew annually, with fees capped at $200.
  • Drafting a partnership agreement is strongly recommended to avoid disputes over profits, management, or dissolution.
  • Taxation is pass-through, meaning LLP income is reported on each partner’s individual tax return.
  • LLPs are especially popular among professional service firms but can be used by most businesses.
  • Other limited liability partnership structures in Missouri include limited partnerships (LPs) and limited liability limited partnerships (LLLPs).

A Missouri limited liability partnership gives all partners limited liability and the freedom to manage the business as though they were general partners. All partners in a limited liability partnership can be involved in the active management of the business, unlike the setup in a limited partnership formation.

About Limited Liability Partnerships

When new businesses are being formed, partnerships are one of the most common choices. In a general partnership, the partners are personally liable for some of the financial obligations of the business. This is not the case with a limited liability partnership (LLP).

Businesses that provide professional services such as accounting and law are frequently formed as an LLP. In the state of Missouri, any business can register as a limited liability partnership. This is possible as long as there is a minimum of two partners. A sole proprietor cannot form an LLP.

Types of Partnerships in Missouri

Missouri law recognizes several partnership structures, each with different liability protections:

  • General Partnership (GP): Created automatically when two or more people operate a business for profit. A general partnership in Missouri does not require registration, but all partners share unlimited personal liability for debts and lawsuits.
  • Limited Partnership (LP): Includes at least one general partner with unlimited liability and one or more limited partners whose liability is capped at their investment. Limited partners usually do not participate in daily management.
  • Limited Liability Partnership (LLP): Protects all partners from personal liability for most business debts or the misconduct of other partners. This structure is especially attractive to professional firms such as accountants, attorneys, and consultants.
  • Limited Liability Limited Partnership (LLLP): A less common hybrid where even the general partners enjoy liability protection.

Choosing the right structure depends on the balance between liability protection, management flexibility, and tax treatmentForming a Limited Liability Partnership

Business Name

For any partnership operating under a name other than the partners' surnames, the business name must be registered with the state. The business name must denote the limited liability partnership status by the inclusion of "LLP" after the business name. The name of a foreign registered LLP or a registered US limited partnership must be distinguishable from other business names already registered and in the Secretary of State record database.

This includes names for:

  • Limited partnerships.
  • Limited liability companies.
  • Corporations.
  • Business trusts.
  • Foreign registered limited liability partnerships.
  • Registered limited liability partnerships.

It is possible to reserve the entity name by filling out a name reservation form. This reserves the name for 60 days.

Registered Agent

A registered agent must be designated for the limited liability partnership. The registered agent is authorized to accept important paperwork/documents for the business. A business lawyer can help you with the process of selecting an agent.

Application to Register a Limited Liability Partnership

To form a limited liability partnership, the registration application must be filed with the Missouri Secretary of State. The registration application form will require the following information:

  • Partnership name.
  • Resident agent's name and physical address.
  • The purpose of the limited liability partnership.
  • The number of partners.
  • Any additional information you or the other partners want to provide.
  • Signatures of authorized partners or signatures from the majority of partners.

The fee for the initial registration of a limited liability partnership in Missouri varies since it is dependent on the number of partners, but the fee cannot exceed $200. The status of LLP is in effect for one year once the registration is completed. Registration must be renewed each year.

General Partnership vs. Limited Liability Partnership

Understanding the differences between a general partnership in Missouri and a limited liability partnership is key to making the right choice:

  • Liability Exposure:
    • General Partnership: All partners are personally liable for debts and legal claims.
    • LLP: Partners are not personally responsible for business debts or another partner’s negligence.
  • Formation Requirements:
    • General Partnership: No state filing is required; it forms automatically through business activity.
    • LLP: Requires filing an application with the Secretary of State and paying the registration fee.
  • Management:
    • Both GPs and LLPs allow partners to actively manage the business, unlike corporations or LPs where management may be restricted.
  • Credibility:
    • An LLP may appear more professional to lenders, investors, and clients due to its formal registration and liability shield

Dissolution of Previous Partnership

Under Missouri law, registering as a limited liability partnership does not affect or dissolve a previous partnership. Registering extends the shield of liability to the other partners involved. The special registration process and renewal procedures are necessary to acquire limited liability status. The maintenance, ownership, and management of the LLP are still handled like those of a general partnership.

Partnership Agreement

It is recommended that a partnership agreement be drafted. The agreement outlines each partner's rights and responsibilities within the company. This could include procedures such as the addition of new partners, the process of distributing profits, and the termination of the partnership. In the event of a legal dispute, a written partnership agreement can prevent lengthy litigation.

Filing and Maintenance Requirements

LLPs in Missouri must meet certain ongoing requirements to stay in good standing:

  • Annual Renewal: Registration lasts one year and must be renewed each year. Failure to renew can cause the LLP status to lapse, reverting the business to a general partnership with unlimited liability.
  • Public Records: Information such as partner names, the registered agent, and the partnership’s address becomes part of the public record.
  • Recordkeeping: While Missouri does not mandate specific internal records, maintaining minutes, agreements, and financial statements is a best practice for liability protection and dispute prevention

Taxes

Limited liability partnerships are not a tax-paying entity structure. While business activities are reported to the IRS, the taxes are paid individually by each partner. The income from the LLP passes through to the partners, who in turn report the income to the IRS. How much each pays is determined by the percentage of the shares they hold in the business.

Benefits of Limited Liability Partnerships

An LLP's debts and/or a partner's poor choices resulting in negligence or misconduct are also not your responsibility. This means your personal assets cannot be used to take care of a partner's debts unless you chose to guarantee payment. You are only financially responsible for your own actions.

LLP partners in Missouri are not protected from all business liabilities, such as personal misconduct or neglect. Purchasing liability insurance can help offset these potential risks.

Frequently Asked Questions

1. Do I need to file paperwork to start a general partnership in Missouri?

No. A general partnership forms automatically when two or more people carry on a business for profit. However, registration may be required if using a business name different from the partners’ surnames.

2. How much does it cost to register an LLP in Missouri?

The filing fee is based on the number of partners but cannot exceed $200. Annual renewals are also required.

3. Can any business form an LLP in Missouri?

Yes. While professional service firms commonly use LLPs, Missouri law allows most types of businesses with at least two partners to register as an LLP.

4. Are LLP partners personally liable for business debts?

Generally no. Partners in an LLP are protected from liability for business debts and the actions of other partners. However, they remain responsible for their own negligence or misconduct.

5. What happens if I don’t renew my LLP registration?

If you fail to renew, your business reverts to a general partnership, exposing all partners to unlimited personal liability.

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