Partnerships (General & Limited)

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Partnership Formation in Connecticut

A partnership is a business arrangement where two or more people share ownership, management responsibilities, profits, and losses. Connecticut recognizes several partnership types under the Uniform Partnership Act (C.G.S. Chapter 614) and the Uniform Limited Partnership Act (C.G.S. Chapter 615).

Partnerships offer flexibility and simplicity but come with important liability considerations that vary by partnership type.

Types of Partnerships in Connecticut

General Partnership (GP)

All partners share equally in management, profits, losses, and liability. Each partner can bind the partnership through their actions.

Simple Formation: Can form without formal filing (though written agreement strongly recommended)
Shared Management: All partners participate in business decisions
Pass-Through Taxation: Partnership doesn't pay taxes—profits/losses pass to partners' personal returns

Critical: General partners have unlimited personal liability for partnership debts and obligations. Each partner can be held personally responsible for actions of other partners.

Limited Partnership (LP)

Consists of at least one general partner (with unlimited liability) and one or more limited partners (with liability limited to their investment).

Limited Partners Protected: Liability limited to amount invested—personal assets protected
Passive Investment: Limited partners are investors only—cannot participate in management
Requires Filing: Must register Certificate of Limited Partnership with Connecticut Secretary of State

Note: General partners retain unlimited liability. Limited partners lose protection if they participate in management.

Limited Liability Partnership (LLP)

Available only to certain professional practices (attorneys, accountants, architects). Partners protected from liability for other partners' malpractice while remaining personally liable for their own actions.

Professional Use Only: Limited to licensed professionals in Connecticut
Malpractice Shield: Partners not liable for other partners' professional errors
Active Management: All partners can participate in firm management

When to Choose a Partnership

Professional Practices:

Law firms, accounting practices, medical groups (consider LLP or Professional LLC)

Real Estate Ventures:

Limited partnerships popular for real estate investments with active and passive investors

Family Businesses:

When family members want shared management or when some want active roles while others prefer passive investment

Consider This: For most new businesses, an LLC provides better liability protection with similar tax benefits and management flexibility. Partnerships work best when there's a specific reason to use that structure—such as professional regulations or complex investor arrangements.

Partnership Agreement Essentials

A comprehensive partnership agreement is critical for avoiding disputes and protecting all partners. We draft agreements addressing:

Capital contributions and ownership percentages
Profit and loss distribution
Management authority and decision-making processes
Partner compensation and draws
Adding or removing partners
Dispute resolution procedures
Buyout provisions and valuation methods
Dissolution and winding up procedures
Death or incapacity of a partner
Non-compete and confidentiality obligations

Ready to Form Your Connecticut Partnership?

Contact Darius Law Group to discuss partnership structures and draft a comprehensive partnership agreement.