Creating a Limited Partnership in Texas: A Step-by-Step Overview

Forming a limited partnership in Texas involves a structured process that allows entrepreneurs to establish a flexible business entity with both general and limited partners. This guide provides an overview of the key steps involved in forming a limited partnership in Texas, along with important considerations and best practices.

IMPORTANT NOTICE: The information provided in this guide is for general informational purposes only and does not constitute legal advice. It is strongly recommended that you consult with a Texas-licensed attorney like Thomas P. Finley, Jr. Attorney at Law throughout the process of forming your limited partnership to ensure compliance with all applicable laws and regulations.

1. Choose a Unique Partnership Name
   • The name of your limited partnership must be distinguishable from the names of other business entities on file with the Texas Secretary of State.
   • Your partnership name must contain the phrase “limited partnership” or the abbreviation “L.P.” or “LP.”
   • Conduct a thorough name search using the Texas Secretary of State’s SOS Direct system to ensure availability.
   • Consider reserving your chosen name for up to 120 days by filing Form 501 with the Secretary of State.
2. File the Certificate of Limited Partnership
   • The Certificate of Limited Partnership is the formal document that establishes your limited partnership in Texas.
   • This certificate must be filed online, by fax, by mail, or in person with the Texas Secretary of State.
   • The filing fee is $750, and the certificate must include the following information:

1. The partnership’s name
   b. Principal office address
   c. Registered agent name and address
   d. Name and address of each general partner
   e. Purpose of the partnership (optional)
   f. Effective date (if different from the filing date)

• Ensure all information is accurate and complete to avoid delays or rejection of your filing.
• Consider engaging a Texas-licensed attorney like Thomas P. Finley, Jr. Attorney at Law, to review and assist with the preparation and filing of the certificate.

3. Create a Limited Partnership Agreement
   • The limited partnership agreement is a crucial internal document that outlines the rights, responsibilities, and obligations of the general and limited partners.
   • While not required to be filed with the state, a well-drafted agreement is essential for the smooth operation of your partnership.
   • This agreement should cover essential provisions, including but not limited to:

1. Definitions and interpretation
   b. Formation and purpose of the partnership
   c. Capital contributions and capital accounts
   d. Allocation of profits, losses, and distributions
   e. Management structure and authority of the general partner(s)
   f. Rights and obligations of limited partners
   g. Voting rights and procedures
   h. Procedures for admitting new partners or removing existing partners
   i. Transfer of partnership interests
   j. Indemnification and liability provisions
   k. Dispute resolution mechanisms
   l. Amendment procedures for the agreement
   m. Dissolution and winding up of the partnership

• It is highly recommended to have a Texas-licensed attorney like Thomas P. Finley, Jr. Attorney at Law to draft or review your limited partnership agreement to ensure it adequately protects all partners’ interests and complies with Texas law.