When Florida businesses are founded, members have to decide which type of business partnership will be established based on the structure partners want for the business.
What Types of Partnerships Can Be Formed in Florida?
So, what types of partnerships can be formed in Florida? In Florida, there are four types of partnerships:
- General Partnerships
- Limited Partnerships
- Limited Liability Partnerships, and,
- Limited Liability Limited Partnerships
Reed works with businesses to create business partnership agreements or operating agreements to further define and legally secure roles, revenue, responsibilities, and liabilities of each partner.
What is a General Partnership?
There is the general partnership in Florida where everything is split equally unless people in the partnership create a formal agreement. Otherwise, everyone in the general partnership has the same authority. They have the same ability to make decisions for the partnership, they equally share in the profits and the losses.
And, in a general partnership, they equally share in the liability. If the partnership loses money, they’ll share that loss equally. Each of the partners in a general partnership can be held liable for wrongdoings by their other partner, or some type of tort, or negligence, without a writing.
You can create a writing to shift those things around to different partners, but, a general partnership is a Florida default for people working together.
What Are Limited Partnerships?
Then you get into limited partnerships, limited liability partnerships, and limited liability limited partnerships. This is where you start building up layers of protection for the people involved.
When you talk about a limited partnership, that means you have a general partner or general partners, and then you have limited partner or partners.
In that situation, the general partners are the people that actually run everything. Even if the limited partners don’t like what the general partners are doing, they don’t have a lot of say in the matter.
Liabilities in Limited Partnerships
Primarily, a limited partner contributes money to the partnership. They’re the silent partner.
In a limited partnership, limited partners are protected somewhat in that their liability is based upon their capital contributions.
So if a limited partnership got into a lawsuit, the limited partners’ potential liability is a known: it’s whatever they’ve put into it.
The general partners’ potential liability is not known; it could be, depending upon whatever type of lawsuit, whatever happens to be a vast sum of money.
What is a Limited Liability Partnership?
Then there is a limited liability partnership — an LLP — which is a different type of entity. It takes some aspects of a partnership, and it takes some aspects of a limited liability company — an LLC.
In an LLP, everyone involved in that type of entity is generally responsible for his or her own debts or negligence.
Reed explains that this is why you start building different types of entities — because everyone involved wants different types of protection from liability.
To find out more about Florida business partnerships, or to begin resolution to partnership disputes, consult with a business litigation attorney experienced in partnership law. Talk with Reed about how Bloodworth Law can help you, your family, or your business.