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

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Start a Limited Partnership in New York

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

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

Steps in Starting a Limited Partnership in New York

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 New York. 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 New York

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

Step 1: Research and Preparation

Before starting a limited partnership in New York, 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 New York.

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 New York 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 New York, 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 New York Business Name Search through the New York Department of State Division of Corporations to ensure the name you’ve chosen is available and not already used by another business.

Naming requirements for a Limited Partnership in New York 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 New York.

If the limited partnership name is available, you may choose to reserve it for a specific period of 60 days by filing a name reservation application and paying the online name reservation fee of Not available and mail name reservation fee of $20. 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 two methods, by mail and in person., which costs around $25. In addition, the DBA’s validity in New York is Indefinite, which you can file in New York Secretary of State.

You can check out how to file a DBA in New York 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 New York, your Resident Agent must:

  • Be a resident of New York or a business entity authorized to do business in the state
  • Have a physical address in New York (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 New York 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.

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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 New York.

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 New York laws and regulations, it’s advisable to seek legal advice from a Business Attorney in New York 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 New York government. This process typically involves filing a Certificate of Limited Partnership with the New York 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 New York Secretary of State. Include all necessary information and signatures, and pay the filing fee of $200.

Obtain an Employer Identification Number (EIN) from the IRS

After registering your limited partnership with the New York government, you’ll need to obtain New York 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.

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Register For New York Taxes

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

Step 5: Complying With Additional New York Requirements

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

File Biennial Reports 

New York require limited partnerships to file Biennial Reports with the New York 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 New York 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 New York

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

  • 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 New York, 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 New York?

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

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 New York?
A limited partnership in New York is a type of business structure in which one or more general partners manage the business while one or more limited partners provide funding but have no say in the business management.
How do I start a limited partnership in New York?
To start a limited partnership in New York, you need to file a certificate of limited partnership with the New York State Department of State and obtain any necessary permits or licenses.
What is a general partner?
A general partner in a limited partnership is responsible for managing the business and is exposed to unlimited liability for its debts and obligations.
What is a limited partner?
A limited partner in a limited partnership is primarily a financial contributor who is only liable for the partnership’s debts and obligations to the extent of their investment.
What are the advantages of starting a limited partnership in New York?
Some advantages of starting a limited partnership in New York include limited liability for limited partners, often favorable tax treatment, and relatively simple filing requirements.
What are the disadvantages of starting a limited partnership in New York?
Some disadvantages of starting a limited partnership in New York include the potential for disputes between general and limited partners, lack of flexibility in management structure, and complex tax requirements.
Can foreigners start a limited partnership in New York?
Yes, foreigners can start a limited partnership in New York, but they must have a registered agent who maintains a physical address in the state.
Can I change the management structure of my limited partnership after it is formed in New York?
Yes, but you would need to file an amendment to the certificate of limited partnership with the New York State Department of State.
Can a limited partner participate in the management of a limited partnership in New York?
In general, limited partners in New York cannot participate in the management of a limited partnership to avoid exposing them to additional liability.
Who can act as a registered agent for a limited partnership in New York?
A registered agent for a limited partnership in New York can be an individual who maintains a physical address in the state or a registered agent service.
What is needed for a certificate of limited partnership filing in New York?
Filing a certificate of limited partnership in New York requires the registered agent’s name and address, the names and addresses of the general and limited partners, and information about the partnership’s business activities.
How much does it cost to file a certificate of limited partnership in New York?
The filing fee for a certificate of limited partnership in New York is $200 as of 2021.
Do I need to obtain any licenses or permits before starting a limited partnership in New York?
Depending on the nature of your business activities, you may need to obtain licenses or permits before starting a limited partnership in New York. Contact relevant state departments to determine any necessary requirements.
How long does it take to form a limited partnership in New York?
The processing time for a certificate of limited partnership filing in New York is typically four to six weeks.
Is it possible to expedite the certificate of limited partnership filing process in New York?
Yes, you can expedite the certificate of limited partnership filing process in New York by paying an additional fee.
Can I establish a limited partnership name reservation in New York?
Yes, you can establish a limited partnership name reservation in New York for a fee of $60.
How long does a limited partnership name reservation remain valid in New York?
A limited partnership name reservation in New York remains valid for a period of 60 days.
What happens if another business has the same name as my limited partnership in New York?
If another business has the same name as your limited partnership in New York, you may be required to change your name or come to an agreement with the other business to allow you to continue using the name.
Can I file the certificate of limited partnership online in New York?
No, you cannot file the certificate of limited partnership online in New York at this time.
Are there any tax implications I should be aware of when starting a limited partnership in New York?
Yes, it is important to consult with a tax professional regarding the tax implications of starting a limited partnership in New York, including potential state and federal tax liabilities.
What happens if a limited partner dies or becomes disabled in New York?
If a limited partner dies or becomes disabled in New York, their interests may be transferred or assigned to a new limited partner subject to the provisions of the partnership agreement.
Is an operating agreement necessary for a limited partnership in New York?
Although an operating agreement is not necessarily required by law in New York, it is recommended to avoid any disputes.
Can I register my limited partnership for taxation purposes in another state, even if it was formed in New York?
No, you must register your limited partnership for taxation purposes in New York, where it was formed.
How can I dissolve a limited partnership in New York?
To dissolve a limited partnership in New York, you must file a certificate of cancellation with the New York State Department of State and comply with any other necessary legal requirements.
Who can help me prepare and file all necessary documents to start a limited partnership in New York?
Business lawyers, accounting firms, or incorporation services can help you prepare and file all necessary documents to start a limited partnership in New York.
How often must I file an annual report for my limited partnership in New York?
You must file an annual report for your limited partnership in New York every two years.
Is a limited partnership required to file a New York tax return?
Yes, a limited partnership in New York is required to file a New York tax return regardless of whether or not the limited partnership earns income in the state.
What happens if I don’t file a New York tax return for my limited partnership?
Failure to file a New York tax return for your limited partnership can lead to penalties, fines, and possible legal action.
What is the cost to start a limited partnership in New York?
The cost to start a limited partnership in New York is $200 for filing the Certificate of Limited Partnership with the Secretary of State.
How many partners are required for a limited partnership in New York?
A limited partnership in New York requires at least one general partner and one limited partner.
What is the liability for limited partners in a limited partnership in New York?
Limited partners in a limited partnership in New York have limited liability, meaning they are not personally liable for the partnership’s debts and obligations.
How are profits and losses distributed in a limited partnership in New York?
Profits and losses in a limited partnership in New York are distributed according to the partnership agreement among the partners.
Are limited partners allowed to manage a limited partnership in New York?
Limited partners are not allowed to manage a limited partnership in New York, as they have limited liability and are not responsible for managing the partnership.
What are the advantages of a limited partnership in New York?
The advantages of a limited partnership in New York are that it allows for limited liability for the partners and offers tax benefits compared to other business structures.
What are the disadvantages of a limited partnership in New York?
The disadvantages of a limited partnership in New York are that it requires a general partner to assume unlimited liability and that it can be more complex and expensive to form than other business structures.
Can a limited partnership in New York be dissolved?
Yes, a limited partnership in New York can be dissolved by filing a Certificate of Dissolution with the Secretary of State.
What is a foreign limited partnership in New York?
A foreign limited partnership in New York is a limited partnership that has been formed in another state or country but is conducting business in New York.
Can a foreign limited partnership do business in New York?
Yes, a foreign limited partnership can do business in New York, but it must file a Certificate of Authority with the Secretary of State.
What is a registered agent in New York?
A registered agent in New York is a person or entity that agrees to accept legal documents and official correspondence on behalf of a business entity, such as a limited partnership.
Does a limited partnership in New York have to have a registered agent?
Yes, a limited partnership in New York must have a registered agent with a physical address in New York.
How do I choose a registered agent for my limited partnership in New York?
You can choose a registered agent for your limited partnership in New York by selecting a trustworthy and reliable person or contacting a registered agent service.
What is a Certificate of Good Standing in New York?
A Certificate of Good Standing in New York is a document showing that a business entity, such as a limited partnership, is authorized to do business in New York and is in compliance with state laws and regulations.
Does my limited partnership in New York need a Certificate of Good Standing?
Your limited partnership in New York may need a Certificate of Good Standing for various reasons, such as seeking financing or qualifying to do business in another state.
Can I file the Certificate of Limited Partnership for my limited partnership in New York online?
No, the Certificate of Limited Partnership for a limited partnership in New York cannot be filed online, but it can be mailed or delivered in person.
What must be included in the Certificate of Limited Partnership in New York?
The Certificate of Limited Partnership in New York must include the name and addresses of the partners, the purpose of the partnership, and the duration of the partnership.
Is there an annual fee for a limited partnership in New York?
Yes, there is an annual fee for a limited partnership in New York of $9 for each partner listed in the Certificate of Limited Partnership.
Must a limited partnership in New York file an annual report?
No, a limited partnership in New York is not required to file an annual report, but it must pay the annual fee for each partner listed on the Certificate of Limited Partnership.
What is a Certificate of Amendment in New York?
A Certificate of Amendment in New York is a document that makes changes to the information included in the Certificate of Limited Partnership, such as changing the name of the partnership or the duration of the partnership.
How do I file a Certificate of Amendment for my limited partnership in New York?
To file a Certificate of Amendment for your limited partnership in New York, you must complete the form and file it with the Secretary of State along with the required filing fee.
Can I change the structure of my limited partnership in New York after it has been established?
Yes, you can change the structure of your limited partnership in New York by filing a Certificate of Conversion or Domestication with the Secretary of State.
What is a Certificate of Conversion in New York?
A Certificate of Conversion in New York is a document changing the structure of a partnership, such as converting from a limited partnership to a different business structure.
What is a Certificate of Domestication in New York?
A Certificate of Domestication in New York is a document transferring a partnership from another state or country to the state of New York.
What is a business address in New York?
A business address in New York is the physical location where a business entity carries out its operations and activities.
Can I use a virtual business address for my limited partnership in New York?
No, you cannot use a virtual business address for your limited partnership in New York, as it must have a physical address in the state.

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Conclusion

Starting a limited partnership in New York 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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