Limited Liability Partnership - Iowa Code chapter 486A

A limited liability partnership can be formed when an existing general or limited partnership files a statement of qualification to become a limited liability partnership under Iowa Code section 486A.1001. The limited liability partnership is essentially a form of general partnership with one significant difference. In a general partnership, individual partners are liable for the partnership's debts and obligations whereas the partners in a limited liability partnership are statutorily provided full-shield protection from partnership liabilities, debts and obligations.

Under Iowa Code chapter 486, the old partnership law, partners in a limited liability partnership were protected from personally liability from certain acts or misconduct of other partners, employees, agents, or their representatives. They remained, however, liable for certain partnership obligations, the partner's own acts, and acts of others which the partner supervised. According to the new law passed in 1998, partners in a limited liability partnership are now provided full-shield liability. Iowa Code section 486A.306(3) states that "an obligation of a partnership incurred while the partnership is a limited liability partnership [. . .] is solely the obligation of the partnership." The significance of the change is that a limited liability partnership now provides general partners with liability protections similar to a corporation without the burden of having to adhere to ongoing corporate formalities.

Prior to passing the Iowa Uniform Partnership Act In 1998, Iowa Code chapter 486 applied to partnerships in Iowa. As of January 1, 2001, Iowa Code chapter 486A applies to all partnerships operating in the state of Iowa.

CHOOSING AN APPROPRIATE FORM OF BUSINESS REQUIRES CAREFUL CONSIDERATION OF ISSUES COVERED IN THIS GUIDE AS WELL AS OTHERS NOT DISCUSSED. THIS GUIDE ONLY PROVIDES BASIC INFORMATION ON SOME OF THE LEGAL AND PRACTICAL ISSUES TO CONSIDER WHEN SETTING UP A BUSINESS. IT IS MERELY DESIGNED TO ASSIST PROSPECTIVE ENTREPRENEURS IN THE EARLIEST STAGES OF BUSINESS DEVELOPMENT. THE GUIDE IS NOT A SUBSTITUTE FOR PROFESSIONAL ADVICE. PERSONS CONTEMPLATING STARTING A BUSINESS ARE STRONGLY ENCOURAGED TO CONSULT LEGAL, FINANCIAL AND TAX ADVISORS. FIND AN ATTORNEY THROUGH THE IOWA STATE BAR ASSOCIATION'S ATTORNEY REFERRAL SERVICE.

Limited Liability Partnership - Points to Consider

• All partners enjoy limited liability.
• Partners can pool their resources and talents.
• Management, distribution, etc., are governed by the partnership agreement.
• Tax and liability treatment may not be uniform across state lines.
• All partners have apparent authority to bind the partnership to agreements entered into.
• Limited liability partnerships do not have as much continuity.

Limited Liability Partnership - Procedural Aspects

• Formation
  • A qualifying general partnership may become a limited liability partnership by filing a Statement of Qualification according to I.C. § 486A.1001.
  • The name of a limited liability partnership must end with registered limited liability partnership, limited liability partnership, R.L.L.P.,L.L.P., RLLP, or LLP according to IC §486A.1002.
  • Occasionally a limited liability partnership may need to amend its Statement of Qualification and may do so by filing an Amendment to Statement of Qualification according to IC 486A.1001(8).
• Dissolution - IC § 486A.801 identifies several events which may cause the dissolution of a limited liability partnership. IC §486A.805 allows a partnership to file a Statement of Dissolution with the Secretary of State.
• Merger - A limited liability partnership may file a Statement of Merger according to IC § 486A.907.
• Foreign Limited Liability Partnership - Before transacting business in this state, a foreign limited liability partnership must file a Statement of Foreign Qualification according to IC § 486A.1102. See IC § 486A.1104 for a list of activities which do NOT constitute transacting business in this state.
• Fees - Click here for a Schedule of Fees associated with filings for a limited liability partnership.

Limited Liability Partnership - Key Attributes

• Creation (minimum requirements) - File Statement of Qualification with Secretary of State as a limited liability partnership according to IC § 486A.1001.
• Profits / Losses / Distributions - By agreement or according to IC §§ 486A.401(2).
• Liability - According to IC § 486A.306(3).
• Capital / Financing - By agreement and according to IC § 486A.204.
• Duration - By partnership agreement or on the occurrence of certain events identified in IC § 486A.801. See also IC § 486A.406.
• Transfer of Ownership - By partnership agreement or according to IC § 486A.503.
• Management and Control - By agreement or according to IC § 486A.401(6).
• Taxation -
  State: call Iowa Revenue and Finance at 515-281-3114.
  Federal: call Internal Revenue Service at 800-829-1040.
• Reporting Requirements - None.
• Fee - Schedule of Fees associated with filings for a limited liability partnership.