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Home > Legal Issues > Legal Entities > Partnerships

Overview

As a rule, general partnerships in Virginia can be formed with no formalities, although it is highly advisable to have a written partnership agreement. This agreement should spell out, in considerable detail, such matters as the following:

• How much and what kind of property will each partner contribute to the partnership?
• What value will be placed on the contributed property?
• How will the profits and losses be divided among the partners?
• How with the gain or loss be allocated for tax purposes or property contributed to the partnership by one of more of the partners, where such property has a tax basis significantly greater or less than its agreed value?
• When and how will profits be withdrawn from the partnership?
• How will certain partners be compensated for their services to the partnership (if at all)?
• How will the partners be compensated for making capital available to the partnership?
• How will changes in ownership of interests in the partnership be handled?
• When will the partnership terminate its existence?
• How will the assets and liabilities of the partnership be handled when the partnership is terminated?

A limited partnership, in which there is at least one general partner (who is liable for partnership debts) and at least one limited partner (who is not liable for partnership debts) may also be formed under Virginia law. Unlike a general partnership, a limited partnership must always have a written partnership agreement and must file a "Certificate of Limited Partnership" with the State Corporation Commission.

Limited Liability Partnerships (LLPs) are a new form of partnership permitted in Virginia. Like a Limited Liability Company (LLC) an LLP provides limited liability for its owners while retaining the tax advantages of a partnership. However, unlike an LLC, an LLP typically operates like a regular partnership and is not required to file articles of organization. For more information on LLP registration and the financial responsibility requirements, contact the offices of the State Corporation Commission or your attorney.