Tennessee Limited Partnership FAQ

What exactly is a Tennessee limited partnership?

A limited partnership is a business with two kinds of owners. General partners run it and are personally liable for its debts. Limited partners contribute capital, share in profits, and — provided they stay out of management — are liable only for what they put in. Tennessee governs LPs under the Revised Uniform Limited Partnership Act at Title 61, Chapter 2 of the Tennessee Code. The structure is built for ventures where some people manage and others invest.

How do I form one?

You file a Certificate of Limited Partnership with the Tennessee Secretary of State, Division of Business Services, through the online portal at tncab.tnsos.gov. The partnership exists once the state accepts the filing. Before you file, you'll pick a compliant name, choose a registered agent with a Tennessee street address, and sort out who the general and limited partners are.

Do I need a written partnership agreement?

Tennessee doesn't require you to file one, and a written agreement isn't strictly mandatory for the LP to exist. But you should absolutely have one. Without it, the statutory defaults in Title 61 govern your capital contributions, profit split, and partner rights — and those defaults rarely reflect what the partners actually intended. The agreement is where the real economics of the partnership live.

Can one person form an LP?

A limited partnership needs at least one general partner and at least one limited partner, so a single individual can't hold both roles in a way that creates a genuine two-party partnership. If you're a solo operator, an LLC is usually the better fit. The LP makes sense when you have distinct managing and investing parties.

What's the liability difference between the two partner types?

A general partner is personally liable for the partnership's obligations — creditors can reach their personal assets if the partnership can't pay. A limited partner's exposure is capped at their investment, as long as they don't participate in control of the business. That protection is the defining feature of the limited partner role.

Can a limited partner lose their liability protection?

Yes. If a limited partner starts managing the business — directing operations, making binding decisions, holding themselves out as running the show — they can be treated as a general partner and lose the shield. Tennessee law does carve out "safe harbor" activities that don't count as control, like voting on major matters or consulting with the general partners, and a well-drafted agreement should keep limited partners' involvement inside those lines.

Who has authority to bind the partnership?

The general partner or partners. They sign contracts, take on obligations, and act for the entity. Limited partners generally don't have that authority, which is consistent with their passive role. If your agreement gives limited partners a vote on specific big-ticket decisions, that's a consent right, not day-to-day management authority.

Can a company be a general partner?

Yes. It's common to use an entity — often an LLC or corporation — as the general partner of a limited partnership. This "corporate general partner" structure lets the humans behind the GP put a liability buffer between themselves and the general partner's unlimited liability. Structuring this correctly is a conversation for your attorney and CPA.

How is a Tennessee LP taxed?

For federal purposes, a limited partnership is a pass-through: it files an informational return (Form 1065) and issues Schedule K-1s, and the partners report their shares on their own returns. Tennessee has no personal income tax on wages. But most Tennessee LPs owe the state's franchise and excise tax, administered by the Department of Revenue through the TNTAP portal. That entity-level tax is separate from your Secretary of State filings and is easy to overlook.

What ongoing filings does an LP have?

Two main streams. With the Secretary of State, you file an annual report to keep the partnership active and your public record current. With the Department of Revenue, you file and pay franchise and excise tax on its schedule. Separately, the partnership handles its federal Form 1065 and K-1s each year. Keeping a valid registered agent on file is a continuous obligation running through all of this.

What happens if I miss the annual report?

Miss it and the partnership drifts toward losing good standing; let it lapse long enough and the state can administratively dissolve the LP. A dissolved partnership can't operate in its own name until it's reinstated, which means back filings and fees. Filing on time is far cheaper than cleaning up after a lapse.

Do I need to register for franchise and excise tax right away?

It's wise to set up your Department of Revenue account through TNTAP early rather than waiting for the first filing season. Because franchise and excise tax is one of the most-missed obligations for out-of-state partners, getting registered up front avoids an unpleasant surprise later. Confirm the specifics with a Tennessee CPA.

Do I need a Tennessee registered agent?

Yes, always. Every Tennessee LP must maintain a registered agent with a physical Tennessee street address to receive service of process and state notices. A P.O. box won't do. You can serve as your own agent if you have an in-state address, or use a commercial service — the usual choice for out-of-state partners.

Can out-of-state people form a Tennessee LP?

Yes. Tennessee imposes no residency requirement on general or limited partners. The only in-state requirement is the registered agent's Tennessee address, which a commercial agent satisfies. Plenty of Tennessee LPs are owned entirely by out-of-state partners.

My LP was formed in another state — can it operate in Tennessee?

Not automatically. If your out-of-state LP transacts business in Tennessee, it generally must register as a foreign LP by obtaining a Certificate of Authority and appointing a Tennessee registered agent. This is separate from forming a brand-new Tennessee LP; it authorizes your existing partnership to operate here.