Limited Partnership Longevity: What Happens

Limited Partnership

Longevity: what happens upon the death of a general partner vs. The death of a limited partner?

The partnership will terminate upon the death of any of the partners unless specified otherwise in the partnership agreement.

Profits: can the business retain profits? Are distribution of profits required? How are distributions handled?

Section 503 of the ULPA covers the sharing of a partnership's distributions of profits, stipulating that they are to be distributed according to the value of the contributions made by the partners to the partnership at the time of the distribution. E.g. An investor who contributed $60,000 capital out of a total $100,000 total will be entitled to 60% of whatever distribution the partnership makes to its partners.

Compliance: discuss any meetings, filings, fees or other regulatory requirements.

A partnership need only apply for a standard certificate of organization with the Department of State. There are no special compliance obligations attached to a limited partnership.

4. Location: discuss what is required to expand into another state.

If a limited partnership wishes to do business as a limited partnership in another state, the limited partnership would register itself in the new state by filing a DBA (Doing Business As) form under the same name it is using in the old state.

C-corporation-

1.Longevity: can the company exist indefinitely? What happens upon the death or disassociation of an owner?

A shareholder's shares are treated as the shareholder's real property and are distributed after death as such. Upon the death of an owner (shareholder), the corporation would continue to function normally and the rights attached to those shares would be exercised normally by whomever owns the shares. A corporation survives until it is dissolved voluntarily by its shareholders or involuntarily through bankruptcy, regulatory action, etc.

2.Compliance: discuss and meetings, filings, reports, fees or other regulatory requirements.

Corporations are required to file articles of corporation. During operation, corporations are required to record director and shareholder meetings, update by laws, record stock distributions. Also, corporations have to file financial reports with the SEC.

3.Location: what is required in order to expand into another state?

The corporation would have to file as a foreign corporation in the new state. This requires filing for a certificate of authority with the Department of State.

S-corporation

1.Longevity: can the company exist indefinitely? What happens upon the death or disassociation of an owner?

A shareholder's shares are treated as the shareholder's real property and are distributed after death as such. Upon the death of an owner (shareholder), the corporation would continue to function normally and the rights attached to those shares would be exercised normally by whomever owns the shares. A corporation survives until it is dissolved voluntarily by its shareholders or involuntarily through bankruptcy, regulatory action, etc.

2.Compliance: discuss and meetings, filings, reports, fees or other regulatory requirements.

To register as an S-Corporation, you would just register as a standard C-Corporation, then specify on your IRS Tax Return that you are filing taxes as an S-Corporation.

3.Location: what is required in order to expand into another state?

The corporation would have to file as a foreign corporation in the new state. This requires filing for a certificate of authority with the Department of State.

Limited Liability company-

1.Compliance: discuss and meetings, filings, reports, fees or other regulatory requirements.