How to Start a Limited Partnership in Michigan | A Step-by-Step Guide

by
Start a Limited Partnership in Michigan

A limited partnership is an attractive business structure for those who want to start an LLC in Michigan. It combines the best of both worlds, offering limited liability protection for limited partners and the ability to manage the business for general partners actively. This article will outline the steps on How to Start a Limited Partnership in Michigan, covering everything from researching and preparing to registering your limited partnership with the Michigan government and beyond.

Webinarcare Editorial Team will help you gain knowledge through thorough research and market study. Before starting your Michigan Limited Partnership, all the steps in this article must guide you.

Steps in Starting a Limited Partnership in Michigan

What is a Limited Partnership?

A Limited Partnership (LP) is a business structure comprising two types of partners: general and limited. It is a legal entity distinct from its partners and combines certain features of partnerships and corporations.

General partners are responsible for the day-to-day management of the business, make decisions on behalf of the partnership, and have unlimited liability for the partnership’s debts and obligations. This means their assets can be seized to cover the partnership’s liabilities if necessary.

Limited partners, on the other hand, are passive investors who do not participate in business management. They provide capital to the partnership and receive a share of the profits in return. Their liability is limited to the amount they have invested in the partnership, meaning that their assets are generally not at risk for the partnership’s debts beyond their investment.

It is suggested that you speak with a legal professional before you begin setting up your limited partnership in Michigan. They’ll understand what’s best for you and your company. To safeguard your personal assets from business debts, you can always start an LLC rather than a limited partnership.

– WEBINARCARE EDITORIAL TEAM

Steps in Starting a Limited Partnership in Michigan

To form a limited partnership in Michigan, you must consider following the below guidelines that, include research and preparation, establishing the limited partnership structure, drafting the limited partnership agreement, registering the limited partnership, complying with additional Michigan requirements, and ongoing management and compliance and reporting requirements. 

Step 1: Research and Preparation

Before starting a limited partnership in Michigan, you must familiarize yourself with this business structure’s laws and regulations. In the United States, limited partnerships are primarily governed by the Uniform Limited Partnership Act (ULPA). However, each state has its laws and regulations, so it’s essential to know the specific rules that apply in Michigan.

While researching, consider whether a limited partnership is the most suitable structure for your business needs. Limited partnerships are ideal for businesses with one or more passive investors who want to avoid taking on the business’s day-to-day responsibilities. Consider alternative structures like Michigan Corporations if a limited partnership doesn’t seem right.

Step 2: Establishing The Limited Partnership Structure

Once you’ve determined that a limited partnership is the right choice for your business, the next step is to establish the structure of your partnership. This involves choosing a name, hiring a Resident Agent, and determining the roles of the partners.

Choose a Name for the Limited Partnership

The name you choose for your limited partnership is essential to your business identity. In Michigan, there are specific requirements that your limited partnership name must meet, such as including the words “Limited Partnership” or the abbreviation “LP.” Before settling on a name, conduct Michigan Business Name Search through the Michigan Department of Licensing and Regulatory Affairs to ensure the name you’ve chosen is available and not already used by another business.

Naming requirements for a Limited Partnership in Michigan may include:

  • The name must be unique and distinguishable from other business entities registered in the state.
  • The name must include the words “Limited Partnership,” “L.P.,” or “LP.”
  • Certain words and phrases may be restricted or require additional approval from Michigan.

If the limited partnership name is available, you may choose to reserve it for a specific period of 6 months by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $10. If your corporation plans to operate under a name other than its legal name, you may also need to register a fictitious or “doing business as” (DBA) name. 

The DBA filing can be done by three methods, online, by mail, and in person filing., which costs around $25 for LLCs and $10 for LPs. In addition, the DBA’s validity in Michigan is five years, which you can file in Michigan Secretary of State.

You can check out how to file a DBA in Michigan for clearer understanding.

Hire a Resident Agent

A Resident Agent is a person or entity responsible for receiving legal documents and official notices on behalf of your LP. In Michigan, your Resident Agent must:

  • Be a resident of Michigan or a business entity authorized to do business in the state
  • Have a physical address in Michigan (P.O. boxes are not acceptable)

Choosing a reliable and responsible Resident Agent is essential, as failure to receive and respond to legal documents can seriously affect your business. 

You can serve as your own Resident Agent or appoint a friend or family member, or hire a professional Michigan Resident Agent Services. With that, we reviewed some of the best-registered agent services and provided features as an add-on with their formation packages for you to check out.

LLC Service

Rating & Pricing

Top Features

Learn More

#1 Recommendation

$299 Per Year

  • Free LLC Formation

  • RA service in all states

  • Legal consultation

Learn More

$125 Per Year

  • Flat price for RA service

  • LLC formation package

  • Fast service

Learn More

Determine the Roles of the Partners

A limited partnership consists of two types of partners: general and limited. General partners are responsible for the day-to-day management of the business and have unlimited liability for the partnership’s debts and obligations. Limited partners, on the other hand, are passive investors who don’t participate in the management of the business and have limited liability up to the amount they’ve invested in the partnership.

As you structure your partnership, carefully consider who will take on the roles of general and limited partners. Remember that general partners will have more responsibility and potential liability, so choose those individuals wisely.

Step 3: Drafting the Limited Partnership Agreement

With the partnership structure established, the next step is to draft a limited partnership agreement. This document sets forth the partnership’s terms and conditions and should be carefully crafted to ensure it meets all legal requirements in Michigan.

Include Essential Elements

A well-drafted limited partnership agreement should include the following essential elements:

  •  Name of the limited partnership
  •  Purpose of the limited partnership
  •  Duration of the limited partnership
  •  Names and addresses of general and limited partners
  •  Capital contributions of each partner
  •  Allocation of profits and losses
  •  Management and decision-making structure
  •  Process for admitting new partners

Address Optional Elements

In addition to the essential elements, it’s a good idea to address the following optional elements in your limited partnership agreement:

  •   Transfer of partnership interests
  •   Withdrawal or removal of partners
  •   Dissolution and winding up the process

To ensure your limited partnership agreement is legally sound and compliant with Michigan laws and regulations, it’s advisable to seek legal advice from a Business Attorney in Michigan with experience in limited partnerships.

Step 4: Registering the Limited Partnership

Once your limited partnership agreement is in place, the next step is to register your limited partnership with the Michigan government. This process typically involves filing a Certificate of Limited Partnership with the Michigan Secretary of State’s office.

Prepare and File the Certificate of Limited Partnership

To file the Certificate of Limited Partnership, complete the required forms, which can typically be found on the Michigan Secretary of State. Include all necessary information and signatures, and pay the filing fee of $50.

Obtain an Employer Identification Number (EIN) from the IRS

After registering your limited partnership with the Michigan government, you’ll need to obtain Michigan Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This number is used to identify your partnership for tax purposes and is required for filing federal and state tax returns.

The application of an EIN can be through the following:

  • Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN, you can benefit in several ways. It will give your LLP the absolute advantage necessary to operate at full capacity without encountering legal or judicial issues.

Recommended: If you would like to get your EIN easier, Legalzoom’s EIN services will obtain your tax ID number a breeze. Their knowledgeable team and easy-to-use platform allow businesses to quickly and confidently navigate the process. We recommend using –

LegalZoom – Pricing at $79

Register For Michigan Taxes

Depending on your business activities and location, you may need to register for certain Michigan taxes. Check with the Michigan Department of Treasury or a tax professional to determine which taxes apply to your limited partnership.

Step 5: Complying With Additional Michigan Requirements

In addition to registering your limited partnership with the Michigan government, there may be other requirements you need to meet to operate your business legally. These may include obtaining business licenses or permits, filing annual reports with the Michigan Secretary of State, and maintaining proper records and documentation.

Obtain Any Necessary Business Licenses or Permits.

Depending on the nature of your business, you may need to obtain various licenses or permits from state or local authorities. Check with the Michigan Department of Business and Industry or a licensing professional to determine which licenses and permits apply to your limited partnership. However, in Michigan, the costs of Michigan Business Licenses range from $50 – $300.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Michigan.

File Annual Reports 

Michigan require limited partnerships to file Annual Reports with the Michigan Secretary of State’s office. These reports typically include updated information about the partnership, such as the names and addresses of partners and any changes to the partnership agreement. 

Recommended: Legalzoom’s annual report services provide a comprehensive and streamlined approach to ensuring businesses maintain compliance and transparency. Their attention to detail and dedication to client satisfaction make them the go-to choice for all your annual reporting needs. We recommend using –

LegalZoom – Starts at $99 + filing fees

Maintain Proper Records and Documentation

As a limited partnership, it’s essential to maintain proper records and documentation, including copies of your limited partnership agreement, tax returns, financial statements, and any other relevant documents. These records should be kept in a safe and accessible location and may be required in the event of an audit or legal dispute.

Step 6: Ongoing Management and Compliance

Starting a limited partnership in Michigan is the beginning. To ensure the ongoing success of your business, it’s crucial to stay on top of management and compliance tasks. It is better to have regular meetings with your partners to ensure everyone is on the same page regarding the direction and performance of your business. These meetings can also help identify and address issues or concerns before they become more significant problems.

As a limited partnership, you must file annual tax returns and pay any required taxes at the federal and state levels. Consult with a tax professional to ensure you comply with all tax laws and deadlines.

Advantages of Limited Partnerships in Michigan

Here are some key advantages of forming a limited partnership in Michigan:

  • Limited Liability for Limited Partners: One of the main benefits of a limited partnership is that limited partners enjoy limited liability protection. This means their assets are generally not at risk for the partnership’s debts and obligations beyond their investment in the partnership. This limited liability can be attractive for investors who want to participate in a business venture without taking on the same level of risk as general partners.
  • Pass-through Taxation: Limited partnerships are typically subject to pass-through taxation, meaning the partnership’s profits and losses flow to the partners’ individual tax returns. This structure avoids double taxation, as the partnership is generally not subject to federal income tax. Instead, each partner is responsible for paying taxes on their share of the partnership’s income at their individual tax rate.
  • Flexibility: A limited partnership allows for flexibility in the management structure. General partners have the authority to make decisions and manage the business, while limited partners can remain passive investors. This division of responsibilities and decision-making power can appeal to both parties. It allows general partners to maintain control over the business operations and limited partners to invest without being involved in day-to-day management.
  • Ease of Formation: A limited partnership is typically less complicated and expensive than a corporation. Limited partnerships generally require filing a Certificate of Limited Partnership with the state and creating a limited partnership agreement, which is less complex than the documentation required for a corporation.
  • Attracting Capital: Limited partnerships can attract capital from investors who want to participate in a business venture without taking on the responsibilities and risks of being a general partner. This structure can help businesses secure funding while allowing limited partners to benefit from the partnership’s profits.
  • Continuity of the Partnership: In Michigan, limited partnerships can continue to exist even if one of the general partners dies, withdraws, or is replaced, as long as there is at least one remaining general partner. This continuity can provide stability and help ensure the ongoing success of the partnership.

Can a Foreign Limited Partnership Do Business in Michigan?

Yes, a foreign Limited Partnership can do business in Michigan by registering as a foreign LP with the Michigan Secretary of State or appropriate state agency. The foreign LP must provide a certificate of good standing from its home state and pay any required registration fees.

What are the Tax Implications of Forming a Limited Partnership in Michigan?

Limited Partnerships are generally considered pass-through entities for tax purposes, meaning that the profits and losses of the business are passed through to the individual partners, who report them on their personal income tax returns. However, specific tax implications may vary depending on the state and the nature of your business. It is recommended to consult with a tax professional to determine your specific tax obligations.

FAQs

What is a limited partnership in Michigan?
A limited partnership in Michigan is a business formation that consists of one or more general partners, who manage the business and bear personal liability for its debts, and one or more limited partners, who invest in the business but have no control over its operations or management.
How do I register a limited partnership in Michigan?
You can register a limited partnership in Michigan by filing Articles of Organization with the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau.
What is the filing fee for registering a limited partnership in Michigan?
The filing fee for registering a limited partnership in Michigan is $50.
Can I register a limited partnership in Michigan online?
Yes, you can register a limited partnership in Michigan online through the Michigan Business One Stop website.
What information do I need to provide to register a limited partnership in Michigan?
You will need to provide the name and address of the limited partnership, the name and address of each general partner, and the name and address of the registered agent for the limited partnership.
Do I need to have a registered agent to register a limited partnership in Michigan?
Yes, Michigan law requires all limited partnerships to have a registered agent in the state.
Can I be my own registered agent for my Michigan limited partnership?
Yes, but you must have a physical street address in Michigan where service of process can be received during normal business hours.
What is a Certificate of Limited Partnership in Michigan?
A Certificate of Limited Partnership in Michigan is a legal document that confirms the existence of a limited partnership in the state.
Do I need to file a Certificate of Limited Partnership in Michigan?
Yes, you must file a Certificate of Limited Partnership in Michigan within 90 days after the formation of the limited partnership.
How much does it cost to file a Certificate of Limited Partnership in Michigan?
The filing fee for a Certificate of Limited Partnership in Michigan is $50.
What is the minimum number of partners required to form a limited partnership in Michigan?
The minimum number of partners required to form a limited partnership in Michigan is two
Is there a maximum number of partners for a limited partnership in Michigan?
No, there is no maximum number of partners for a limited partnership in Michigan.
Can a business be both a general and limited partner in a Michigan limited partnership?
Yes, a business can be both a general and limited partner in a Michigan limited partnership.
What is a limited liability partnership in Michigan?
A limited liability partnership in Michigan is a business formation in which each partner is shielded from personal liability for the errors, omissions, malpractice, or negligence of other partners.
Can a limited partnership convert to a limited liability partnership in Michigan?
Yes, a limited partnership can convert to a limited liability partnership in Michigan.
How do I dissolve a limited partnership in Michigan?
You must file a Certificate of Dissolution with the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau.
What is the fee for filing a Certificate of Dissolution in Michigan?
The fee for filing a Certificate of Dissolution in Michigan is $10.
When should a limited partnership file a Certificate of Dissolution in Michigan?
A limited partnership should file a Certificate of Dissolution in Michigan when it ceases to do business or when there are no remaining partners.
How do I make changes to my Michigan limited partnership?
You must file a Certificate of Amendment with the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau.
What information do I need to provide on a Michigan Certificate of Amendment?
You will need to provide the name and address of the limited partnership, the section of the Certificate of Limited Partnership being amended, and the specific change being made.
How much does it cost to file a Certificate of Amendment in Michigan?
The filing fee for a Certificate of Amendment in Michigan is $25.
Can a limited partnership change its name in Michigan?
Yes, a limited partnership can change its name in Michigan by filing a Certificate of Amendment.
What is a Foreign Limited Partnership in Michigan?
A Foreign Limited Partnership in Michigan is any entity that was formed in another state or country and is seeking to do business in Michigan.
Does a Foreign Limited Partnership have to register in Michigan?
Yes, a Foreign Limited Partnership must register to do business in Michigan by filing an Application for Certificate of Authority with the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau.
What is the filing fee for an Application for Certificate of Authority for a Foreign Limited Partnership in Michigan?
The filing fee for an Application for Certificate of Authority for a Foreign Limited Partnership in Michigan is $50.
Can I file an Application for Certificate of Authority for my Foreign Limited Partnership in Michigan online?
No, you must file an Application for Certificate of Authority for a Foreign Limited Partnership in Michigan by mail.
How often do I need to file an annual report for my Michigan limited partnership?
You must file an annual report for your Michigan limited partnership every year by February 15.
What information do I need to provide on my annual report for my Michigan limited partnership?
You will need to provide the name and address of the limited partnership, the name and address of each general partner, the name and address of the registered agent for the limited partnership, a brief description of the nature of the limited partnership’s business activities, and any attachments required or requested by the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau.
Where can I find information on how to start a limited partnership in Michigan?
The Michigan Secretary of State’s website has a section on starting a limited partnership.
Do I need a registered agent to start a limited partnership in Michigan?
Yes, you need a registered agent who has a physical address in Michigan.
How many partners are required to start a limited partnership in Michigan?
You need at least one general partner and one limited partner in Michigan.
What is the filing fee for a limited partnership in Michigan?
The filing fee varies depending on the type of limited partnership and other factors.
Can I start a limited partnership in Michigan if I am not a resident of Michigan?
Yes, you can start a limited partnership in Michigan even if you are not a resident of Michigan.
Do I need to file a separate tax return for a limited partnership in Michigan?
Yes, you will need to file a separate tax return for your limited partnership in Michigan.
How do I get a Michigan tax ID number for my limited partnership?
You can apply for a Michigan tax ID number through the Michigan Department of Treasury.
How long does it take to start a limited partnership in Michigan?
The processing time for starting a limited partnership in Michigan can vary depending on various factors like your chosen structure.
Is there a residency requirement to serve as a general partner of a limited partnership in Michigan?
There is no residency requirement to serve as a general partner of a limited partnership in Michigan.
What is a limited partnership agreement in Michigan, and do I need one?
A limited partnership agreement is a document that outlines the rights and responsibilities of each partner in the limited partnership in Michigan. Michigan Limited partnership requires organizations to execute an agreement.
How do I register my limited partnership name in Michigan?
You can register a limited partnership name in Michigan through the Michigan Secretary of State’s website.
What are the yearly compliance requirements for a limited partnership in Michigan?
Annual report filing is a compliance requirement for limited partnerships in Michigan.
Can I convert my limited liability company to a limited partnership in Michigan?
Yes, you can convert your limited liability company to a limited partnership in Michigan by following the appropriate steps.
What is the difference between a general partner and a limited partner for a limited partnership in Michigan?
A general partner has personal liability for the limited partnership’s debts and obligations, while a limited partner’s personal liability is limited to the extent of their investment.
Can a single person serve as both the general and limited partner of a limited partnership in Michigan?
Yes, a single person can serve as both the general and limited partner, although it may not be advisable due to the potential personal liability for the general partner is usually personal.
Is there a set time limit for running my limited partnership in Michigan?
No, there is no time limit for running a limited partnership in Michigan.
If I am not familiar with the process of starting a limited partnership in Michigan, can I hire someone to help me?
Yes, many professional firms assist with the formation of a limited partnership in Michigan.
What are the other types of business structures available in Michigan?
In Michigan corporations, llc, sole proprietorship, partnership are available.
Is there a requirement to publish notice of my limited partnership formation in Michigan?
No, there no requirement of publishing notice of my limited partnership in Michgan.
Can I own another business and still serve as a partner in a limited partnership in Michigan?
Yes, or should there be no clause of such prohibitions in limited partnership agreements.
Are there any restrictions on what I can name my limited partnership in Michigan?
Yes, your limited partnership name cannot be identical banned names reserved by the Michigan law.
What information do I need to provide to start my limited partnership in Michigan?
Basic information like business name, business purpose, principal office address and partner names, SSN(O passport details) and residency.
How do I renew my limited partnership in Michigan?
Michigan limited partnership are renewed annually by filing an annual report.
What happens if I don’t renew my limited partnership in Michigan?
Your partnership status breaks after 1 year, so best solution is renewing on time or disenrolling.
Can I move my Michigan limited partnership to another state after creation?
Yes, you can move your Michigan-partnered limited partnership to any permissible state.
Do I need to have an operating agreement for my limited partnership in Michigan?
An operating agreement isn’t mandatory under Michigan law, but it’s beneficial if a partnership faces problems.
Are there any ongoing record-keeping requirements for my Michigan limited partnership?
Yes, partnership repair and managing necessary minute books.
Does Michigan levies business taxes on limited partnerships?
Yes, corporation or franchise tax or pass-through tax for limited business is taxable under Michigan Laws.
Can I have non-US citizen partners in my Michigan limited partnership?
Yes, you surely can have non-Michigan/national citizen partner in your Michigan business incorporations.

Also Read

Conclusion

Starting a limited partnership in Michigan can be a rewarding experience, providing you with the benefits of limited liability protection for passive investors and the opportunity to manage your business actively. By following the steps outlined in this article and staying on top of ongoing management and compliance tasks, you can establish a successful limited partnership and enjoy the benefits of this unique business structure.

Leave a Comment