Learn what a Limited Partnership (LP) is, how it works, filing requirements, tax rules, and compliance obligations, plus how FastFile supports LP formation and filings.
Oregon Limited Partnership Definition and Compliance Guide
A Limited Partnership (LP) is a specialized business structure commonly used for investment-driven ventures, real estate projects, private funds, and family businesses that require clear separation between management authority and capital participation.
What Is a Limited Partnership (LP)
A limited partnership (LP) is a formal business structure recognized under U.S. state law that consists of at least one general partner and one or more limited partners.
The general partner manages the business and assumes personal liability for partnership obligations, while limited partners contribute capital and share in profits without participating in daily management. This structure is commonly used for investment-focused ventures where passive ownership is desired while maintaining centralized control.
Key Characteristics of a Limited Partnership
- Two distinct classes of partners
A limited partnership is defined by the presence of at least one general partner and one or more limited partners. This dual-partner structure separates management authority from investment participation, allowing the business to function with clear operational control while attracting passive capital.
- Centralized management authority
All management power is vested in the general partner, who is responsible for operating the business, making strategic decisions, and entering into binding agreements. Limited partners do not participate in management, which helps preserve their limited liability status under state law.
- Limited liability for passive investors
Limited partners receive liability protection that generally restricts their financial exposure to the amount of their capital contribution. This protection applies only if limited partners remain passive and do not engage in activities that could be viewed as management or control.
- Personal liability exposure for general partners
The general partner is personally liable for the debts, obligations, and legal liabilities of the limited partnership. To manage this risk, many LPs appoint an LLC or corporation as the general partner to create an additional liability barrier.
- Governance through a limited partnership agreement
The internal operations of a limited partnership are governed by a written limited partnership agreement. This document defines profit allocation, capital contributions, partner rights, voting provisions, and exit terms, providing legal clarity and reducing the risk of disputes.
What Is a Limited Partnership (LP)
Roles in a Limited Partnership
1. General partner responsibilities and authority
The general partner holds full authority to manage and operate the limited partnership. This includes entering contracts, overseeing business operations, making financial decisions, and representing the LP in legal matters.
General partners owe fiduciary duties of care and loyalty to the partnership and its limited partners. Because of their management role, general partners are personally liable for the debts and obligations of the LP unless a liability-shielding entity, such as an LLC or corporation, is used as the general partner.
2. Limited partner rights and restrictions
Limited partners primarily serve as investors in the limited partnership. They contribute capital and receive distributions of profits and losses as outlined in the partnership agreement.
To maintain limited liability protection, limited partners must refrain from participating in management or decision-making activities. Their liability is generally limited to the amount of their investment, provided they comply with state law restrictions on involvement in operations.
How a Limited Partnership Is Formed in the United States
A limited partnership is formed at the state level by filing a Certificate of Limited Partnership or similar formation document with the appropriate Secretary of State office. The filing identifies the partnership name, registered agent, general partner information, and other statutory details.
Most states also require the LP to maintain a registered agent and may impose additional disclosure or publication requirements depending on jurisdiction.
Ownership and Management Structure of a Limited Partnership
Ownership in a limited partnership is divided between general and limited partners based on capital contributions and agreement terms. Management authority rests exclusively with the general partner, while limited partners retain economic rights without operational control.
A written limited partnership agreement governs profit allocation, voting rights, capital contributions, and exit terms, providing the legal framework for internal governance and dispute resolution.
Tax Treatment of a Limited Partnership
A limited partnership is typically taxed as a pass-through entity for federal tax purposes. The LP itself does not pay income tax; instead, profits and losses pass through to partners and are reported on their individual or entity tax returns using IRS Form 1065 and Schedule K-1.
General partners may be subject to self-employment tax on their distributive share, while limited partners are generally exempt from self-employment tax on passive income, subject to IRS rules.
Ongoing Compliance Requirements for a Limited Partnership
- Annual or biennial state reporting obligations
Most states require limited partnerships to file periodic reports to confirm current partner information, addresses, and registered agent details. Failure to file required reports can result in penalties, loss of good standing, or administrative dissolution.
- Registered agent maintenance
A limited partnership must maintain a registered agent in its state of formation at all times. The registered agent receives legal notices, service of process, and official government correspondence, making this requirement critical for ongoing compliance.
- Amendment filings for material changes
Changes involving general partners, partnership names, principal business addresses, or management authority typically require filing an amendment with the state. These filings ensure public records accurately reflect the LP’s current structure.
- Tax filing and reporting responsibilities
Although a limited partnership is usually treated as a pass-through entity, it must still file IRS Form 1065 annually and issue Schedule K-1 forms to partners. Partners are responsible for reporting their distributive shares on individual or entity tax returns.
- Recordkeeping and internal documentation
Limited partnerships must retain formation documents, partnership agreements, financial records, and tax filings in accordance with legal and accounting standards. Proper recordkeeping supports compliance, audits, financing, and potential partner transitions.
Ownership and Management Structure of a Limited Partnership
Common Limited Partnership Filings and Business Services
1. Limited partnership registration services
Limited partnership registration services involve preparing and filing the Certificate of Limited Partnership with the appropriate state authority. This filing formally establishes the LP, identifies the general partners, lists required business information, and places the partnership on the state’s public record.
2. LP amendments and changes
LP amendments are required when key partnership details change after formation. Common amendments include updates to the partnership name, registered agent, principal office address, or changes in general partners. Some states also require amendments when partnership terms are modified or when a general partner withdraws or is replaced.
3. LP dissolution and termination filings
LP dissolution and termination filings formally close the limited partnership with the state once business operations have ended. These filings confirm that the partnership has completed its winding-up process, satisfied outstanding obligations, and distributed remaining assets according to the partnership agreement.
4. EIN and banking support for LPs
An Employer Identification Number (EIN) is required for most limited partnerships to open bank accounts, file federal tax returns, and conduct financial transactions. EIN and banking support services assist LPs in obtaining an EIN from the IRS and preparing documentation commonly requested by banks, such as formation filings and partnership information.
When a Limited Partnership Is the Right Business Structure
A limited partnership is well-suited for businesses that require passive investors, such as real estate ventures, private equity arrangements, or family investment structures.
It allows capital contributors to participate financially without assuming management responsibilities, while enabling experienced operators to maintain control through the general partner role. This structure is often chosen when investment and management functions need to be clearly separated.
How FastFile Supports Limited Partnerships
FastFile provides structured support for limited partnerships at every stage of their lifecycle, ensuring filings are accurate, timely, and compliant with state requirements.
1. LP registration and formation services
FastFile prepares and files Certificates of Limited Partnership, confirms registered agent requirements, and reviews partnership details to ensure the LP is properly established under applicable state law.
2. LP amendments, annual reports, and compliance
When partnership details change, FastFile assists with LP amendments, annual or biennial reports, and other required compliance filings to help maintain active status.
3. LP dissolution, EIN, and tax-related filings
FastFile supports proper LP dissolution and termination filings, EIN applications, and related documentation so partnerships can close or restructure correctly without lingering obligations.
How FastFile Supports Limited Partnerships
4. FastFile pricing, document requirements, and 24-hour processing
With a guided process, answers to approximately 10 simple questions, flat-fee pricing starting from $90, and filings often processed within 24 hours, FastFile delivers an efficient and dependable solution for limited partnership compliance and business filings.
Conclusion
A limited partnership offers a structured and flexible way to combine active management with passive investment while maintaining clear legal boundaries between partner roles. When properly formed and maintained, an LP can support long-term growth, investment planning, and operational efficiency.
FastFile provides dependable, end-to-end support for limited partnership formation, amendments, compliance, and dissolution. Our service portfolio includes preparation and filing of Certificates of Limited Partnership, Articles of Amendment, Annual or Biennial Reports, and Articles of Dissolution.
With a guided intake process, careful document review, transparent flat-fee pricing, and filings often completed within 24 hours, FastFile helps general and limited partners stay compliant without unnecessary delays or confusion.
Whether you are forming a new LP, updating partnership details, or closing the partnership properly, FastFile delivers an organized and reliable solution that lets you move forward with confidence.