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A limited partnership has three pieces: (1) the Partnership Agreement, (2) the Limited Partner(s), and (3) the General Partner. The General Partner is typically a traditional LLC (a shell company) that is filed in the state where the Limited Partnership will be conducting business. The Partnership Agreement must also be drafted to isolate all of the operations of the Limited Partnership to the General Partner while allocating all of the profits to the Limited Partner(s). This separate the liability to the General Partner while all of the assets and profits are protected. These entities are particularly useful for Canadian investors purchasing assets in the United States.
USA investors have multiple options including establishing a Series LLC to hold the assets and a separate LLC to take on all of the liability. Canadian investors, however, must use a Limited Partnership to ensure they receive the best tax treatment. In Canada, LLC income is taxed higher than Limited Partnership income.
Royal Legal Solutions has clear advantages from our experience in establishing Limited Partnerships. We have relationships with cross-border CPA’s in Canada that regularly advise us on any changes in the tax code that would affect our mutual clients. You will receive the best tax information available regarding your company structure.