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

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Start a Limited Partnership in Washington

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

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

Steps in Starting a Limited Partnership in Washington

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 Washington. 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 Washington

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

Step 1: Research and Preparation

Before starting a limited partnership in Washington, 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 Washington.

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 Washington 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 Washington, 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 Washington Business Name Search through the Washington Secretary of State Corporations and Charities Filing System to ensure the name you’ve chosen is available and not already used by another business.

Naming requirements for a Limited Partnership in Washington 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 Washington.

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 $30 and mail name reservation fee of $30. 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 $24. In addition, the DBA’s validity in Washington is Indefinite, which you can file in Washington Secretary of State.

You can check out how to file a DBA in Washington 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 Washington, your Registered Agent must:

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

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 Washington laws and regulations, it’s advisable to seek legal advice from a Business Attorney in Washington 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 Washington government. This process typically involves filing a Certificate of Limited Partnership with the Washington 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 Washington Secretary of State. Include all necessary information and signatures, and pay the filing fee of $180.

Obtain an Employer Identification Number (EIN) from the IRS

After registering your limited partnership with the Washington government, you’ll need to obtain Washington 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 Washington Taxes

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

Step 5: Complying With Additional Washington Requirements

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

File Annual Reports 

Washington require limited partnerships to file Annual Reports with the Washington 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 Washington 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 Washington

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

  • 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 Washington, 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 Washington?

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

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 the process for registering a limited partnership in Washington?
The process for registering a limited partnership in Washington involves filing a Certificate of Limited Partnership with the Washington Secretary of State’s Office.
Who can form a limited partnership in Washington?
Two or more individuals or entities can form a limited partnership in Washington.
What are the benefits of forming a limited partnership in Washington?
The benefits of forming a limited partnership in Washington include liability protection for the limited partners and potential tax advantages.
What are the requirements that must be met by the general partner in Washington?
The general partner of a limited partnership in Washington must be designated as such in the Certificate of Limited Partnership, and must also meet certain legal and fiduciary obligations.
What type of business entities can be designated as a limited partner in Washington?
Any type of business entity, including other limited partnerships, can be designated as a limited partner in Washington.
How must a limited partnership be named in Washington?
The name of a limited partnership in Washington must contain the words “limited partnership” or “LP” in the name, and must not conflict with any other registered business names in the state.
Are there any residency requirements for partners in a Washington limited partnership?
No, there are no residency requirements for partners in a Washington limited partnership.
How does the liability of limited partners differ from that of general partners in a Washington limited partnership?
Limited partners in a Washington limited partnership are not personally liable for the partnership’s debts and obligations, while general partners may be personally liable.
What tax implications are there for a limited partnership in Washington?
A limited partnership in Washington is typically not subject to state income tax, but individual partners may still be responsible for paying personal income tax on their share of partnership income.
Can a limited partnership in Washington own property?
Yes, a limited partnership in Washington can own property, and property ownership is often a common reason for forming a limited partnership.
What types of professions are prohibited from forming limited partnerships in Washington?
Certain professional occupations, including attorneys, accountants, healthcare providers, and architects, may be limited in their ability to form a limited partnership in Washington.
What registration fees are required for a Washington limited partnership?
The current registration fee for a Washington limited partnership is $200.
Are there any annual reports that are required to be filed for a Washington limited partnership?
Yes, a Washington limited partnership must file an annual report with the Secretary of State’s Office each year.
Is a limited partnership required to have a written partnership agreement in Washington?
Yes, a written partnership agreement is highly recommended for any Washington limited partnership.
How can I find out if a business name for a Washington limited partnership is available to use?
Business name availability can be checked using the Washington Secretary of State’s Office online business search tool.
Can a limited partnership in Washington have more than one general partner?
Yes, a limited partnership in Washington can have more than one general partner.
Is a lawyer required to form a limited partnership in Washington?
No, a lawyer is not required to form a limited partnership in Washington, but it may be recommended to ensure compliance with all legal requirements.
Is there a residency requirement for a limited partnership’s registered agent in Washington?
No, there is no residency requirement for a limited partnership’s registered agent in Washington.
Can an individual be both a general partner and a limited partner in a Washington limited partnership?
Yes, an individual can be both a general partner and a limited partner in a Washington limited partnership.
How can I dissolve a Washington limited partnership?
A Washington limited partnership can be dissolved by filing a Certificate of Cancellation with the Secretary of State’s Office.
Can a Washington limited partnership be converted into a different type of business entity, such as a corporation?
Yes, the conversion of a Washington limited partnership to a different type of business entity is possible, but partners should consult with a legal professional to ensure compliance with state laws.
How many partners are required for a Washington limited partnership?
A minimum of two partners are required for a Washington limited partnership.
Can a limited partner participate in the management of a Washington limited partnership?
No, limited partners in a Washington limited partnership are typically prohibited from participating in the management of the partnership.
Does Washington have any unique requirements for the name of a limited partnership?
In Washington, a limited partnership cannot use a name that implies that it is engaging in any business without a license or approval that is required in Washington.
What happens if a limited partner contributes more than their originally agreed-upon share of capital to a Washington limited partnership?
A limited partner who contributes more than their originally agreed-upon share of capital to a Washington limited partnership may be treated as a general partner.
Can a limited partnership in Washington continue if its term expires without renewal?
Yes, a Washington limited partnership can continue operating even if its term expires without renewal.
How does a limited partnership maintain its status as a limited partnership in Washington?
A limited partnership in Washington must maintain certain legal and corporate formalities to remain a limited partnership, including maintaining accurate and up-to-date records and filing required reports.
Can a limited partner terminate their involvement in a Washington limited partnerships without dissolving the partnership?
Yes, a limited partner can typically withdraw their involvement in a limited partnership in Washington without dissolving the partnership, although it may require the unanimous consent of all partners.
What is a limited partnership in Washington?
A limited partnership is a legal business structure that consists of one or more general partners who manage the business and one or more limited partners who contribute capital but do not play a role in managing the business.
How is a limited partnership established in Washington?
In order to establish a limited partnership in Washington, you must file a certificate of limited partnership with the Washington Secretary of State.
Who can be a general partner in a limited partnership in Washington?
Any individual or entity can be a general partner in a limited partnership in Washington, as long as they meet the state’s requirements for doing so.
What are the advantages of forming a limited partnership in Washington?
Forming a limited partnership in Washington can provide several advantages, including limited liability for the limited partners, tax benefits, and flexibility of management.
How are profits and losses distributed in a limited partnership in Washington?
The profits and losses of a limited partnership in Washington are typically distributed among the partners according to their ownership interests in the partnership as outlined in the partnership agreement.
What is a partnership agreement and is it required in Washington?
A partnership agreement is a legal document that outlines the rights and responsibilities of each partner in a limited partnership. It is not required by law in Washington, but it is highly recommended.
How is a limited partnership taxed in Washington?
In a limited partnership in Washington, the partnership itself is not subject to federal income tax. Rather, the income is “passed through” to the individual partners who report it on their individual tax returns.
How many partners are required to form a limited partnership in Washington?
In Washington, a limited partnership can consist of one or more general partners and one or more limited partners.
What are the filing fees for a limited partnership in Washington?
The filing fees for a limited partnership in Washington vary depending on various factors, such as the type of partnership and the number of partners. You should check with the Washington Secretary of State for current fees.
What are the annual maintenance requirements for a limited partnership in Washington?
In Washington, a limited partnership must file an annual report with the Washington Secretary of State and maintain current contact information for each partner.
Can a limited partnership in Washington hold property under its own name?
Yes, a limited partnership in Washington can hold property under its own name.
Is there a minimum amount of capital required to form a limited partnership in Washington?
No, there is no minimum amount of capital required to form a limited partnership in Washington.
How is the limited partnership structured in terms of management in Washington?
In a limited partnership in Washington, the general partners typically manage the day-to-day operations of the business, while the limited partners play a passive role.
Can a limited partnership in Washington be dissolved or sold?
Yes, a limited partnership in Washington can be dissolved or sold. The partnership agreement should outline the specific terms and conditions for doing so.
Can an out-of-state partnership do business in Washington?
Yes, an out-of-state partnership can do business in Washington. However, it must obtain the necessary licenses and register as a foreign limited partnership with the Washington Secretary of State.
How is a limited partnership in Washington different from a general partnership?
The primary difference between a limited partnership and a general partnership in Washington is that in a limited partnership, the limited partners are not responsible for the debts or liabilities of the business beyond the amount of their contributions.
Can a limited partner also be a general partner in a limited partnership in Washington?
Yes, in a limited partnership in Washington, a partner can be both a limited and general partner as long as the partnership agreement allows for it.
Are there any restrictions on who can be a limited partner in a limited partnership in Washington?
No, there are no restrictions on who can be a limited partner in a limited partnership in Washington.
Is Washington a good state to form a limited partnership?
Many businesses find Washington to be a good state to form a limited partnership due to its favorable business climate, strong economy, and comprehensive legal protections for businesses and investors.
Are there any ongoing reporting requirements for a limited partnership in Washington?
Yes, a limited partnership in Washington must file an annual report with the Washington Secretary of State and maintain current contact information for each partner.
How long does it take to form a limited partnership in Washington?
The length of time it takes to form a limited partnership in Washington varies depending on numerous factors, such as the complexity of the partnership and the workload of the Washington Secretary of State’s office.
Can a limited partnership in Washington change its status to become a different type of business structure?
Yes, a limited partnership in Washington can change its status to become a different type of business structure, such as an LLC or corporation. The specific process for doing so depends on various factors and should be carefully considered and researched before moving forward.
Are limited partners in a limited partnership in Washington legally liable for the actions of the partnership?
No, limited partners in a limited partnership in Washington are generally not legally liable for the actions of the partnership beyond the amount of their respective contributions.
Can a limited partnership in Washington hold meetings and make company decisions without all partners present?
Yes, a limited partnership in Washington can hold meetings and make company decisions as long as the partnership agreement outlines the necessary quorum and voting requirements for doing so.
Are there any special tax considerations for limited partnerships in Washington?
Yes, there are several tax considerations for limited partnerships in Washington, such as differences in taxation between limited and general partners and the availability of certain tax breaks and deductions.
How are disputes between limited partners and general partners typically handled in Washington?
Disputes between limited partners and general partners in Washington are typically handled through the legal system or through alternative dispute resolution methods, such as mediation or arbitration.
What types of businesses are best suited for forming a limited partnership in Washington?
Many types of businesses can benefit from forming a limited partnership in Washington, such as real estate investment, joint ventures, and partnerships among professionals like lawyers and doctors.
Can a limited partnership in Washington issue stock?
No, a limited partnership in Washington cannot issue stock. Only corporations and similar business structures can issue stock in Washington.
Is it costly to form a limited partnership in Washington?
Forming a limited partnership in Washington can be somewhat costly, but the fees and expenses are typically straightforward and reasonable for most businesses considering this legal structure.

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Conclusion

Starting a limited partnership in Washington 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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