Partnerships are a common formed business structure in Illinois. The main difference between a limited partnership and a general partnership is that it allows for both limited and general partners. While a limited partner invests in the company, a general partner oversees day to day operations.
Because of the risks a limited partnership can pose to its general partners, the entity is not recommended for long standing businesses. Instead, limited partnerships are great for short-term projects, like family estate planning and film production. They’re often used for raising investments where limited partners act more like stockholders.
The requirements for a limited partnership in Illinois are as follows:
To create a limited partnership in Illinois, a Certificate of Limited Partnership needs to be filed with the Secretary of State. Before it can be filed, the Certificate of Limited Partnership must include:
A partnership agreement should also be drafted. This defines the rights and responsibilities of all involved parties. This agreement can help prevent litigation down the road should a dispute occur.
In Illinois, the main benefit of a limited partnership is that it does not have to file taxes. Instead, its income is passed through to its partners where it is reported on an individual level.
Limited partners enjoy other benefits of limited partnerships in Illinois. Limited partners are not personally liable for business debts or other financial obligations. Should a limited partnership file for bankruptcy in Illinois, a limited partner’s assets cannot be collected. The one disadvantage of being a limited partner in this type of partnership is having minimal influence on business management and protocols.
General partners enjoy running a business in a limited partnership without investing much of their own finances. But they can be held personally liable for business debts and legal judgments.
Disclaimer: The information provided on this blog is intended for general informational purposes only and should not be construed as legal advice on any subject matter. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Each individual's legal needs are unique, and these materials may not be applicable to your legal situation. Always seek the advice of a competent attorney with any questions you may have regarding a legal issue. Do not disregard professional legal advice or delay in seeking it because of something you have read on this blog.
Kevin O'FlahertyKevin O’Flaherty is a graduate of the University of Iowa and Chicago-Kent College of Law. He has experience in litigation, estate planning, bankruptcy, real estate, and comprehensive business representation.
Want to learn more about ?
Download your FREE E-book by clicking below.
