Attorneys Adept At Forming Partnership Businesses
Not all business ventures start with a single person. In many situations, entrepreneurs go into business with friends and family members, all with the hopes of one day making their business successful and profitable. With several partnership classifications to choose from, however, it’s important for entrepreneurs looking to form their own business to understand the advantages and disadvantages of each one and to discuss with a skilled business law attorney, which option makes the most sense for the situation at hand.
Because of our decades of experience and diverse legal backgrounds, the lawyers at Jones & Walden LLC, are uniquely equipped to address and handle the complex legal needs of business owners in Atlanta and surrounding areas in Georgia. We have extensive experience handling a wide variety of business formations, including partnerships, which allows us to educate our clients on the right choice for their business.
Types Of Partnerships
A partnership is an association of two or more partners who wish to carry on (as co-owners) a business venture for profit. Unlike corporations and limited liability companies, there are no statutory requirements or other formalities required for formation of a general partnership. There are, however, several additional types of partnerships that are subject to rules of formation. These types of partnerships include:
- General partnerships
- Limited liability partnerships
- Family limited partnerships
A general partnership is based upon and formed by a partnership agreement between two or more individuals or other entities. A written partnership agreement is highly recommended but not specifically required. There is also no limitation on the general partners’ liability, and each partner is jointly liable for all debts and liabilities of the partnership. For this reason, general partnerships are not a favored form of conducting business.
Partnerships are distinguishable from joint ventures in that joint ventures are often formed for a single transaction whereas partnerships are generally formed to conduct ongoing business activities.
A limited partnership, or “LP,” must have at least one general partner and one limited partner. A limited partnership is often preferable to a general partnership because the limited partners receive limited liability.
As with a general partnership, the general partners (or a single general partner) of the limited partnership manage the business of the enterprise and such general partner(s) are liable for the partnership’s debts and liabilities. Due to such exposure to liability, the general partner of a limited partnership is typically a corporation or limited liability company.
The limited partners contribute capital and receive a portion of the profits, but such limited partners are only liable in proportion to each limited partner’s contribution to the partnership.
Limited partnerships are formed by entering a partnership agreement and filing a “Certificate of Limited Partnership” with the secretary of state. This “Certificate of Limited Partnership” should contain the following:
- The name of the limited partnership
- The address of the registered office
- The name and address of the initial registered agent for service of
- The name and address of each general partner
The certificate forming the limited partnership can also contain any other matters the partners decide to include that are not inconsistent with applicable law.
Both general partnerships and limited partnerships may elect to limit their liability to a greater extent by converting to a limited liability partnership, or LLP, (for general partnerships) or a limited liability limited partnership, or LLLP, (for limited partnerships).
A general partnership can become a limited liability limited partnership by first satisfying the requirements for becoming a limited partnership and then making the LLLP election. For both LLPs and LLLPs, the conversion is accomplished by filing an election with the clerk of Superior Court in the applicable county and completing other statutory requirements.
These matters should be carefully discussed with an attorney at Jones & Walden LLC, as we can walk you through each step of the process.
Family Limited Partnerships
A “family limited partnership” is not actually a formal type of entity in Georgia; rather, the term signifies a limited partnership in which members of a family hold most or all of the partnership interests. Accordingly, a family limited partnership must be formed by satisfying all statutory requirements and other formalities that apply to standard limited partnerships.
An entity (e.g., corporation or LLC) controlled by one or more family members typically serves as the general partner, and family members act as limited partners after making actual or nominal contributions to the partnership. The family limited partnership is an estate planning mechanism that provides significant protection for the family’s assets that are owned by the partnership.
The family limited partnership also allows the family members to substantially reduce or manage estate taxation and gift taxes on transfers to children or other family members. This partnership form can also be used to spread income from the parents’ higher tax brackets to the lower tax brackets of the children.
We encourage you to explore the family limited partnership with your attorney as part of a larger estate plan.
Addressing Disputes And Litigation
Partnership agreements are not without risk as disputes that arise after formation can lead to litigation if situations aren’t addressed quickly and effectively. At Jones & Walden LLC, we have extensive litigation experience and are well-equipped to address business disputes inside and outside of the courtroom. From partnership disputes to contractual disagreements and more, we have the skills and resources to protect your best interests all while finding a fair resolution.
Get Our Help Forming A Partnership In Georgia
If you’re considering forming a partnership in Georgia, contact our Atlanta office to schedule a consultation with one of our incredibly experienced lawyers. We can help you make the right decision for your situation to ensure your business is in the best possible position moving forward. Call 678-701-9235 now or contact us online to set up an appointment.