As mentioned in Part 1, two other typical business structures in Texas are the “general partnership” and “limited partnership.”
A general partnership is created when two or more persons associate to carry on a business for profit. There is no law in Texas mandating that the “partners” sign a written partnership agreement and there are no requirements to file documents with the Texas Secretary of State. However, operating a business with someone else without a written partnership agreement is often a bad decision. Therefore, if you choose to operate a business as a partnership, for whatever reason, it is best to begin with a written partnership agreement. If the business of the partnership is conducted under an assumed name (a DBA, as discussed in Part 1), then the partnership should file an assumed name certificate with the Texas Secretary of State and with the office of the county clerk in the county where the business office is maintained. An assumed name certificate should also be filed in all counties where business is conducted under the assumed name.
A limited partnership (“LP”) is a partnership formed by two or more persons and has at least one general partner. It will also have one or more limited partners. As this is a more complex structure, it is typical that a limited partnership operates in accordance with a written partnership agreement. However, a partnership agreement is not required to be in writing. As with a general partnership agreement, a limited partnership agreement is not filed with the Texas Secretary of State. However, the limited partnership must file a certificate of formation with the Texas Secretary of State and pay the required fee. A certificate of formation form can be found on the Texas Secretary of State website.
In Part 3 we will discuss Corporations.