Choosing between an LLC and a limited partnership?
A Florida LLC shields every owner and keeps management flexible; a limited partnership splits control and liability between a general partner and its limited partners. The right entity turns on how the business is run, who bears liability, and your tax and estate-planning goals. If you’re forming a new company or restructuring an existing one, we can help.
Request a ConsultationEffective January 1, 2014, the Legislature has revised the Limited Liability Act (LLC) that governs the creation and operation of the Limited Liability Concept under Florida law. All LLC’s formed after January 1, 2014 shall be subject to the new LLC state found in Chapter 605 of Florida Statutes.
Cox Law PLLC will update you on the changes and modifications to the new statute in subsequent postings under this title.
Florida LLCs: The Basics
A Florida limited liability company (LLC) is governed by Chapter 605, Florida Statutes — the Florida Revised Limited Liability Company Act. An LLC is a hybrid entity that gives its owners, called “members,” the limited-liability protection of a corporation together with the management flexibility and pass-through taxation of a partnership. For the complete rules, a Florida LLC is governed by Chapter 605, Florida Statutes, and a Florida limited partnership is governed by Chapter 620, Florida Statutes.
Members are generally not personally liable for the company’s debts or obligations; their exposure is limited to what they invest. An LLC may be member-managed, with all members running the business, or manager-managed, with the members appointing one or more managers. By default the LLC is not taxed as a separate entity — profits and losses pass through to the members’ own returns — although it may elect to be taxed as a corporation. An LLC is formed by filing articles of organization with the Florida Division of Corporations and should be governed by a written operating agreement.
LLC vs. Limited Partnership
A limited partnership (LP) is a different entity, governed by Chapter 620, Florida Statutes — the Florida Revised Uniform Limited Partnership Act of 2005. Both entities offer limited liability to some of their owners and both are typically taxed as pass-through entities, but they differ in several important respects.
The key difference lies in ownership and liability. A limited partnership must have at least one general partner and one or more limited partners. The general partner runs the business and is personally liable for the partnership’s obligations, while the limited partners are passive investors whose liability is capped at their capital contribution. In an LLC, by contrast, every member enjoys limited liability whether or not they take part in managing the company.
Control of a limited partnership therefore rests with its general partner, and limited partners have historically risked their liability shield by participating in management — a constraint that does not apply to LLC members. For that reason, limited partnerships are most often used for investment funds, real-estate holdings, and the family limited partnerships common in estate planning, where centralized control by a general partner is an advantage. The LLC, with its flexible management and liability protection for every owner, has become the default choice for operating most small businesses.
Both entities are formed with the Florida Division of Corporations — an LLC by filing articles of organization under Chapter 605, a limited partnership by filing a certificate of limited partnership under Chapter 620.
Choosing between an LLC and a limited partnership depends on how you want the business managed, who should bear liability, and your tax and estate-planning goals. Cox Law PLLC can help you decide which structure best fits your situation.