In this article, we discuss limited partnerships, the requirements for setting up a limited partnership, the benefits and disadvantages to setting up a limited partnership in Iowa, and the process for setting up the limited partnership.
A limited partnership is a legal way to structure a business between two or more individuals or entities. Normally, in a limited partnership, there is a general partner and limited partners. The general partner is tasked with managing the business and overseeing operations while the limited partners have no direct management of the company.
As the name implies, the limited partners have limited liability in the business up to the amount of their investment, while the general partner has unlimited liability. However, the general partner will reap much greater rewards if the business is successful. An example of a limited partnership company in real estate would be an experienced property manager starting a company to flip houses with investors filling the roles of the limited partners. The property manager has the most to gain, but also the most to lose if the business fails.
Each state has its own set of requirements for forming a limited partnership, with many requirements being similar from state to state. The process is not rigid, and having a good attorney can help you figure out the best structure for your business, but Iowa does have a handful of mandatory requirements for setting up a limited partnership:
There no inherent disadvantages of a limited partnership in Iowa versus any other state. The main two disadvantages shared across most LP locations include 1) the cost of filing, which starts at $100 and goes up depending on the needs of the business, and 2) the liability of the general partner being much greater than the limited partners.
Beyond what we’ve discussed above there are a number of other steps that must be taken in order to launch your limited partnership companies. These include:
Starting a business of any kind, limited partnership or otherwise, can be time-consuming and confusing. There are many different types of business partnerships and corporations, and every business is different. Determining the correct legal business formation from the outset of your company is very important. If you have any questions don’t hesitate to call our office and speak to one of our qualified attorneys.
O'Flaherty Law is happy to meet with you by phone or at our office locations in: