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

Start a Limited Partnership in Mississippi

A limited partnership is an attractive business structure for those who want to start an LLC in Mississippi. 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 Mississippi, covering everything from researching and preparing to registering your limited partnership with the Mississippi government and beyond.

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

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 Mississippi. 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 Mississippi

To form a limited partnership in Mississippi, 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 Mississippi requirements, and ongoing management and compliance and reporting requirements. 

Step 1: Research and Preparation

Before starting a limited partnership in Mississippi, 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 Mississippi.

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 Mississippi 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 Registered 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 Mississippi, 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 Mississippi Business Name Search through the Mississippi Secretary of State Business Services to ensure the name you’ve chosen is available and not already used by another business.

Naming requirements for a Limited Partnership in Mississippi 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 Mississippi.

If the limited partnership name is available, you may choose to reserve it for a specific period of 180 days by filing a name reservation application and paying the online name reservation fee of $25 and mail name reservation fee of $25. 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 one method, online, which costs around $25. In addition, the DBA’s validity in Mississippi is five years, which you can file in Mississippi Secretary of State.

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

Hire a Registered Agent

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

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

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

You can serve as your own Registered Agent or appoint a friend or family member, or hire a professional Mississippi Registered 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.

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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 Mississippi.

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 Mississippi laws and regulations, it’s advisable to seek legal advice from a Business Attorney in Mississippi 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 Mississippi government. This process typically involves filing a Certificate of Limited Partnership with the Mississippi 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 Mississippi 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 Mississippi government, you’ll need to obtain Mississippi 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 –

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Register For Mississippi Taxes

Depending on your business activities and location, you may need to register for certain Mississippi taxes. Check with the Mississippi State Tax Commission or a tax professional to determine which taxes apply to your limited partnership.

Step 5: Complying With Additional Mississippi Requirements

In addition to registering your limited partnership with the Mississippi 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 Mississippi 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 Mississippi Department of Business and Industry or a licensing professional to determine which licenses and permits apply to your limited partnership. However, in Mississippi, the costs of Mississippi 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 Mississippi.

File Annual Reports 

Mississippi require limited partnerships to file Annual Reports with the Mississippi 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. 

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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 Mississippi 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 Mississippi

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

  • 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 Mississippi, 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 Mississippi?

Yes, a foreign Limited Partnership can do business in Mississippi by registering as a foreign LP with the Mississippi 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 Mississippi?

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?
A limited partnership is a type of business structure where two or more partners operate the business, but only the general partner has unlimited liability.
Can anyone start a limited partnership in Mississippi?
Yes, anyone can start a limited partnership in Mississippi if they meet the state’s requirements.
What are the requirements to start a limited partnership in Mississippi?
All limited partnerships in Mississippi must file a Certificate of Limited Partnership with the Mississippi Secretary of State and have at least one general and one limited partner.
What is a general partner?
A general partner in a limited partnership has unlimited liability and is responsible for managing the business.
What is a limited partner?
A limited partner in a limited partnership is a passive investor and has limited liability.
Can a limited partner participate in the management of the business?
No, a limited partner cannot participate in the management of the business.
How is a limited partnership taxed in Mississippi?
In Mississippi, a limited partnership is not taxed at the entity level; instead, profits and losses pass through to the partners’ individual tax returns.
What is the minimum number of partners required to start a limited partnership in Mississippi?
A limited partnership in Mississippi must have at least two partners, one general and one limited.
What is the cost to file a Certificate of Limited Partnership in Mississippi?
The cost to file a Certificate of Limited Partnership in Mississippi is $50.
Do I need to have a written agreement to start a limited partnership in Mississippi?
While not required by Mississippi law, it’s highly recommended that all partners have a written agreement outlining the terms of the partnership.
Is an attorney required to form a limited partnership in Mississippi?
No, you do not need an attorney to form a limited partnership in Mississippi, but it’s always recommended to seek legal advice.
Can a limited partnership operate under a different name than its registered name in Mississippi?
Yes, a limited partnership can operate under a different name, known as a “doing business as” (DBA) name in Mississippi.
How long does it take to form a limited partnership in Mississippi?
It typically takes around five business days to process a Limited Partnership Certificate in Mississippi.
How do I dissolve a limited partnership in Mississippi?
To dissolve a limited partnership in Mississippi, you must file a Certificate of Cancellation with the Mississippi Secretary of State.
Do I need to file an annual report for my limited partnership in Mississippi?
No, a limited partnership does not need to file an annual report in Mississippi; however, a tax return must be filed for the business.
Can an out-of-state limited partnership do business in Mississippi?
Yes, an out-of-state limited partnership can do business in Mississippi, but it must register with the Mississippi Secretary of State and meet the state’s requirements.
What is the advantage of forming a limited partnership over a sole proprietorship?
The advantage of a limited partnership over a sole proprietorship is that the liability is limited to the general partner, and the limited partner is protected.
What is the disadvantage of forming a limited partnership over a corporation?
The disadvantage of a limited partnership over a corporation is that the limited partnership does not provide the same level of legal protection for the general partner.
Can a limited partnership sell stock to raise capital?
No, a limited partnership cannot sell stock to raise capital; instead, it must rely on investments from partners.
What happens if a limited partner decides to leave the partnership in Mississippi?
A limited partner can leave the partnership but must file a Certificate of Cancellation with the Mississippi Secretary of State.
What happens if a general partner dies in Mississippi?
If a general partner dies, the limited partnership may dissolve; it’s recommended to have a written agreement outlining succession plans.
Can a limited partnership convert into a different entity type in Mississippi?
Yes, a limited partnership can convert to a different entity type in Mississippi, but it must meet certain requirements and follow a specific process.
Can a foreign limited partnership do business in Mississippi?
Yes, a foreign limited partnership can do business in Mississippi, but it must register with the state and receive authority to do so.
Is liability limited for all partners in a limited partnership in Mississippi?
No, only the limited partner is protected from liability; the general partner has unlimited liability.
What is the difference between a limited partnership and a limited liability partnership in Mississippi?
In a limited partnership, liability is limited for the limited partner but not the general partner, while in a limited liability partnership, all partners have limited liability.
Can a limited partnership have a single owner in Mississippi?
No, there must be at least two partners, one general and one limited for a partnership to be considered a limited partnership in Mississippi.
Can an individual be both a general and a limited partner in Mississippi?
Yes, an individual can be both a general and a limited partner in Mississippi, but it is unusual.
What is the difference between a limited partnership and a general partnership in Mississippi?
In a general partnership, liability is unlimited for all partners, while in a limited partnership, the limited partner has limited liability.
How do I start a limited partnership in Mississippi?
To start a limited partnership in Mississippi, you need to file a certificate of limited partnership with the Secretary of State.
What is a limited partnership in Mississippi?
A limited partnership in Mississippi is a type of business entity where there are one or more general partners who manage the business and one or more limited partners who invest in the business but have limited liability.
How many people do I need to start a limited partnership in Mississippi?
You need at least one general partner and one limited partner to start a limited partnership in Mississippi.
Is there a fee to file a certificate of limited partnership in Mississippi?
Yes, there is a fee to file a certificate of limited partnership in Mississippi. The fee varies depending on the type of partnership and the number of partners.
Do I need an attorney to form a limited partnership in Mississippi?
No, you do not need an attorney to form a limited partnership in Mississippi, but it is recommended to seek legal advice to ensure you are complying with all necessary requirements.
Are there any residency requirements to start a limited partnership in Mississippi?
No, there are no residency requirements to start a limited partnership in Mississippi.
Can I operate my limited partnership in other states besides Mississippi?
Yes, you can operate your limited partnership in other states besides Mississippi, but you will need to register your partnership in those states as well.
Can a limited partner actively participate in the management of the business in Mississippi?
No, a limited partner cannot actively participate in the management of the business in Mississippi without jeopardizing their limited liability protection.
How do I choose a name for my limited partnership in Mississippi?
You can choose any name for your limited partnership in Mississippi as long as it is not already taken and complies with the state’s naming requirements.
What are the naming requirements for a limited partnership in Mississippi?
The name of your limited partnership in Mississippi must include the words “limited partnership” or the abbreviation “L.P.” at the end.
What are the requirements for being a general partner in a limited partnership in Mississippi?
A general partner must be at least 18 years old and can be an individual or another entity, such as a corporation.
What are the requirements for being a limited partner in a limited partnership in Mississippi?
There are no specific requirements for being a limited partner in a limited partnership in Mississippi.
What is the liability protection for limited partners in Mississippi?
In Mississippi, limited partners have limited liability protection, meaning their personal assets are protected from business debts and obligations.
What is the liability protection for general partners in Mississippi?
In Mississippi, general partners do not have limited liability protection, meaning their personal assets can be used to pay off business debts and obligations.
What is required for an annual report filing for a limited partnership in Mississippi?
In Mississippi, limited partnerships are not required to file annual reports.
Can I convert my limited partnership in Mississippi to a different business entity type?
Yes, you can convert your limited partnership in Mississippi to a different business entity type by filing the necessary paperwork with the Secretary of State.
What is the difference between a limited liability partnership and a limited partnership in Mississippi?
The main difference between a limited liability partnership and a limited partnership in Mississippi is the liability protection offered to partners.
Can a corporation be a partner in a limited partnership in Mississippi?
Yes, a corporation can be a partner in a limited partnership in Mississippi.
What is a foreign limited partnership?
A foreign limited partnership is a partnership that is organized under the laws of another state or country, but operates in Mississippi.
Can a foreign limited partnership operate in Mississippi without registering with the Secretary of State?
No, a foreign limited partnership that wants to operate in Mississippi must register with the Secretary of State.
Can a limited partnership in Mississippi be formed for any purpose?
Yes, a limited partnership in Mississippi can be formed for any lawful purpose.
Does Mississippi have a franchise tax for limited partnerships?
Yes, Mississippi does have a franchise tax for limited partnerships.
How is the franchise tax rate calculated for limited partnerships in Mississippi?
The franchise tax rate for limited partnerships in Mississippi is based on the number of partners and the value of the partnership’s property.
Can a limited partner withdraw from the partnership in Mississippi?
Yes, a limited partner can withdraw from the partnership in Mississippi by filing a notice with the partnership or by getting a court order.
What happens if a partnership does not file a certificate of limited partnership in Mississippi?
If a partnership does not file a certificate of limited partnership in Mississippi, it will not be recognized as a legal entity and could face fines or penalties.
What is the difference between a limited partnership and a limited liability company in Mississippi?
The main difference between a limited partnership and a limited liability company in Mississippi is the management structure. A limited partnership has at least one general partner who manages the business, while a limited liability company can be managed by any member or a designated manager.
Can a limited partnership in Mississippi issue stock like a corporation?
No, a limited partnership in Mississippi cannot issue stock like a corporation.

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Conclusion

Starting a limited partnership in Mississippi 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.

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