Dinosaurs are extinct right? Well, not in the business world. There’s a dinosaur still in our midst known as the limited partnership. In reviewing loan documents for a local lender I uncovered what should have been a fossil, but alas, it was still living. Limited partnerships (LP’s) were originally created to allow for both limited liability and the benefit of partnership taxation. (Corporations provide limited liability, but could never be taxed as partnerships.) When limited liability companies (LLC’s) arrived on the scene in the 90’s, limited partnerships became largely obsolete. The Missouri legislature knew this, and therefore, provided a special quick process for converting partnerships to LLC’s. Unfortunately, some people didn’t get the message; and some LP’s are still alive despite their Triassic period birth dates. If you are a limited partner in one of these old reptiles, get some help. The conversion to an LLC will not impact your taxes and will give you a list of benefits which you cannot now enjoy. More importantly, don’t let anyone tell you that a limited partnership is a good vehicle for starting any new business (unless it’s in Jurassic Park).
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