A California Limited Partnership refers to a type of business entity in the state of California that consists of at least one limited partner and one general partner. A limited partnership combines elements of a general partnership with the limited liability of a corporation.
A limited partnership, or LP, occurs when two or more partners conduct a business in which one or more of the partners is liable only for the amount of money invested.
The Business Entities Division of the California Secretary of State outlines and regulates the conditions a business must follow to establish a limited partnership. California state requirements include:
All required documents can be found on the California Secretary of State website, and can be sent by mail or filed in person.
Forming a limited partnership in California has several advantages. Both partners benefit from revenue, investment profits, minimal income taxes, and tax incentives. Other advantages include:
Limited partnerships in California must pay an $800 annual franchise tax. Also, out-of-state partners are subject to withhold income tax if income is more than $1500.
Step 1: Register with the California Secretary of State
Fill out the Certificate of Limited Partnership through the California Secretary of State's website, and submit via mail, in person, or online, and pay the $70 fee. Choose a name for the business. Below are some guidelines to follow:
Out-of-state applicants must fill out a Foreign Limited Partnership Application for Registration form, and pay $800 in annual taxes to California. The form can be found on the Secretary of State's website.
Step 2: Prepare a Partnership Agreement
A partnership agreement is not required, but recommended to prevent possible problems.
Step 3: Get Local Business License and Comply With Local Laws
Laws and requirements may differ by jurisdiction. Information can be found at the CAlGold Business Permits website.
Step 4: Obtain an Employer Identification Number (EIN)
An EIN is obtained through the IRS. Visit the IRS website for EIN information and application.
Step 5: Pay California Limited Partnership Taxes/Fees
Limited Partnership tax information can be found on the California Legislative Information website.
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