Parties form a limited partnership in a manner similar to a general partnership. The most significant difference between these two types of businesses is that some of the owners of the limited partnership, known as limited partners, do not participate in the management and control of the partnership’s business. Instead, limited partners provide capital contributions to the partnership and are liable only to the extent of those capital contributions.
Like a general partnership, owners of a limited partnership enter into a partnership agreement. A limited partnership must file a certificate with an appropriate state authority, usually the secretary of state. The certificate provides the limited partnership’s name and character of business, along with the names and addresses of the general and limited partners. A limited partnership’s name must include “L.P.,” “Ltd,” or “Limited Partnership” to identify the form of the business entity. The purpose for this requirement is to warn those who deal with the partnership that some of the partners are not personally liable for the partnership’s debts.
Nearly every state adopted the Uniform Limited Partnership Act, which was approved in 1916 and again in 1976 by the National Conference of Commissioners on Uniform State Laws (NCCUSL). The NCCUSL significantly revised this uniform law in 2001, though as of 2005 only a small number of states had adopted the revised version.