Delaware Limited Partnership FAQ

What is a limited partnership?

A limited partnership is a business with two classes of partners. At least one general partner manages the business and, in a bare LP, is personally liable for its debts. At least one limited partner contributes capital and shares in profits and losses but stays out of management, with liability capped at what they contributed. Delaware governs LPs under Title 6, Chapter 17 of the Delaware Code — the Delaware Revised Uniform Limited Partnership Act, or DRULPA.

What's the difference between a general partner and a limited partner?

The general partner runs the show and carries the risk; the limited partner puts up money and stays passive. A limited partner who starts actively managing the business can lose the liability protection that makes them "limited" in the first place. That boundary — capital on one side, control on the other — is the defining feature of the structure.

How is a Delaware LP different from an LLC?

An LLC files a Certificate of Formation and is governed by an operating agreement; every member can have liability protection, and members can choose to manage or not. An LP files a Certificate of Limited Partnership, is governed by a limited partnership agreement, and splits roles rigidly between managing general partners and passive limited partners. The general partner of a bare LP has unlimited personal liability, which an LLC member does not. For a solo operator, an LLC is usually simpler; for funds and investor deals, the LP is often the expected form.

Why do people form LPs in Delaware specifically?

Delaware's Court of Chancery, its deep body of partnership case law, and DRULPA's strong "freedom of contract" approach make outcomes predictable and let partners write their own economic rules. The public certificate is also minimal — it doesn't reveal the limited partners or the deal terms — which appeals to investment vehicles that value privacy.

What do I file to create a Delaware LP?

You file a Certificate of Limited Partnership with the Delaware Division of Corporations. It names the LP and its registered agent and is signed by a general partner. It does not list the limited partners or disclose the internal economics.

How long does formation take?

Standard processing runs in business days. Delaware sells expedited tiers — up to same-day and faster — for additional fees if you're on a deadline. The LP exists the moment the state accepts the certificate.

Do I need to live in Delaware?

No. There's no residency requirement for any partner. The only Delaware-presence requirement is the registered agent, who must maintain a physical Delaware address. That's why out-of-state owners use a commercial registered agent service.

Can one person form a Delaware LP?

Not really. An LP needs at least one general partner and one limited partner, so it's inherently a multi-party structure. A solo founder is usually better served by a single-member LLC.

Do I need a written limited partnership agreement?

Delaware doesn't require you to file one, but you should absolutely have one signed before doing business. Under DRULPA, this private contract — not statutory defaults — controls contributions, allocations, distributions, and partner rights. Without it, the state's default rules fill every gap, and they rarely match what the partners intended.

Who is personally liable in a Delaware LP?

The general partner. In a plain LP, the general partner is personally responsible for partnership debts, while limited partners are shielded beyond their contributions. To keep any individual from bearing unlimited liability, many LPs appoint an LLC or corporation as the general partner, so the entity's own shield protects the people behind it.

How is a Delaware LP taxed federally?

By default, a limited partnership is a pass-through entity. The LP files an informational partnership return (Form 1065) and issues Schedule K-1s to the partners, who report their shares of income on their own returns. The partnership itself generally doesn't pay federal income tax. Specific treatment depends on your situation — confirm it with a CPA.

Does Delaware charge the LP a tax?

Yes. Every domestic Delaware LP owes a flat annual tax to the state, due by June 1. It's a payment obligation, not a financial report, and it's owed even in years with no activity. Missing it triggers penalties and interest.

Do limited partners pay self-employment tax?

Generally, limited partners' shares of income aren't subject to self-employment tax the way a general partner's active earnings can be — but this is fact-specific and has nuances the IRS has scrutinized. Talk to a tax professional about your particular arrangement.

What ongoing compliance does a Delaware LP have?

Two recurring things stand out: paying the annual Delaware tax by June 1, and continuously maintaining a valid Delaware registered agent. There's no financial annual report for LPs. If the LP operates in other states, add each of those states' registration and agent requirements to the list.

What happens if I miss the annual tax?

Penalties and interest accrue, and the LP falls out of good standing. Prolonged nonpayment can ultimately render the entity void. Staying current also matters because other states require a Delaware Certificate of Good Standing to let your LP qualify there.

Can I change my registered agent later?

Yes. You file a change with the Division of Corporations to swap agents. The key rule is continuity — the LP must never be left without a valid agent, so line up the new one before removing the old.

How do I dissolve a Delaware LP?

Wind up the business under your limited partnership agreement, settle debts, distribute remaining assets to the partners, and file a Certificate of Cancellation with the Division of Corporations. You'll also want to be current on the annual tax and close out federal tax obligations.

Does the state see my partners' names?

No. The Certificate of Limited Partnership discloses only the LP name and its registered agent. Partner identities, contributions, and profit splits stay in the private limited partnership agreement.

What does Mainstay Filing do for a Delaware LP?

We prepare and file the Certificate of Limited Partnership with the Division of Corporations, provide Delaware registered agent service, return the accepted formation document, and track your annual Delaware tax deadline so it doesn't slip. If you already have an LP, we can take over as your registered agent.

What doesn't Mainstay Filing do?

We're a filing and agent service, not a law firm or accounting practice. We don't draft the economic terms of your limited partnership agreement, advise on the general-versus-limited-partner split, or provide tax planning. For those, you need an attorney and a CPA. We keep the state-facing filings correct and on time.

Can you help if I'm not a US resident?

We can prepare and file your Delaware formation and serve as your registered agent regardless of where you live. Note that applying for an EIN online requires a US Social Security number or ITIN; without one, the responsible party applies by fax or mail with Form SS-4.