Texas Limited Partnership FAQ

How many partners does a Texas LP require?

At least two roles: one or more general partners and one or more limited partners. A single person cannot be the only partner in a limited partnership — that is what an LLC or sole proprietorship is for. In practice, the two roles can be filled by different entities you control, such as an LLC serving as general partner and yourself as the limited partner.

What document creates a Texas LP?

The Certificate of Formation for a limited partnership, filed with the Texas Secretary of State. It names the LP, its registered agent, its principal office, and each general partner. Limited partners are not listed on this public document. Once the state accepts the certificate, the LP legally exists.

Do I have to live in Texas to form one?

No. There is no residency requirement for general or limited partners. The only Texas-presence requirement is the registered agent, who must maintain a physical Texas street address. Out-of-state and international owners form Texas LPs regularly, using a commercial registered agent to satisfy the in-state requirement.

How long does formation take?

Online filings through SOSDirect typically process in a few business days; mail is much slower. Expedited handling is available for an added per-document fee when you are up against a deadline. Actual turnaround depends on the Secretary of State's current workload.

Who is personally liable in an LP?

The general partner. General partners manage the business and are personally responsible for the partnership's debts and obligations — creditors can reach their personal assets if the LP cannot pay. Limited partners are generally shielded, risking only their investment, as long as they stay out of active management.

How do I protect the general partner from personal liability?

The common approach is to make the general partner an entity rather than an individual — usually an LLC. The LLC takes the exposed general-partner role, and the people behind the LLC keep the LLC's liability shield. This adds a second entity to form and maintain, but it removes the biggest risk of the LP structure. It is worth discussing with an attorney.

Can a limited partner lose their liability protection?

Yes. A limited partner who crosses into managing the business the way a general partner would can lose the protection that comes with the passive role. The boundary between contributing capital and controlling operations is central to the LP form, and a good limited partnership agreement spells out what limited partners can and cannot do without jeopardizing their status.

Can one person control the whole LP?

Effectively, yes, through structure. A person can control the LLC that serves as general partner and also hold a limited partnership interest, concentrating both management and economic stakes while keeping the liability separation the form provides. The mechanics should be set up carefully with professional guidance.

How is a Texas LP taxed federally?

By default, a limited partnership is a pass-through entity for federal income tax. The LP files an informational return (Form 1065) and issues each partner a Schedule K-1 reporting their share of income, which the partners report on their own returns. The partnership itself generally does not pay federal income tax at the entity level.

What is the Texas franchise tax?

The franchise tax is Texas's recurring business tax, administered by the Comptroller of Public Accounts, not the Secretary of State. Most Texas LPs are subject to it. Every year you file a franchise tax report and an information report by May 15. Many small partnerships fall under the no-tax-due threshold and owe nothing, but the report is still required.

Why do people say Texas has "no annual report"?

Because the Secretary of State does not send for-profit entities a yearly report the way most states do. That leads people to think there is nothing to file annually. There is — it is just at the Comptroller, in the form of the franchise tax and information report. Separately, the Secretary of State can request a periodic report on an irregular multi-year schedule. Confusing these two agencies is the most common Texas compliance mistake.

Does an LP pay Texas personal income tax?

Texas has no personal income tax, so partners do not pay Texas income tax on their share of LP profits. The franchise tax is the relevant state-level business tax, and whether any is owed depends on the partnership's revenue relative to the no-tax-due threshold.

What do I have to do every year?

File the franchise tax report and information report with the Comptroller by May 15 — even if no tax is due. Keep your registered agent and registered office current with the Secretary of State. Respond to any Secretary of State periodic-report request within its window. Handle any industry-specific state licensing your business requires.

What is the periodic report and how often is it due?

It is a Secretary of State filing confirming your LP's registered agent, registered office, and general partner information. Unlike the annual franchise tax report, it is not yearly — the state requests it on an irregular multi-year cycle. When the request arrives, respond promptly; failing to do so can lead to forfeiture of the LP's right to transact business.

How do I change my registered agent?

File a statement of change with the Secretary of State, with the new agent's Texas street address and consent to serve. It is a separate filing from your franchise tax obligations. A dedicated page on this site covers the process step by step.

How do I close down a Texas LP?

Winding up and termination involves settling debts, distributing remaining assets to partners, obtaining tax clearance from the Comptroller, and filing a certificate of termination with the Secretary of State. Simply stopping operations does not end your filing obligations. The dissolution page on this site walks through it.

What does Mainstay Filing actually do?

We prepare and submit your Certificate of Formation to the Texas Secretary of State, serve as your registered agent at a professional Texas address, and keep you aware of the May 15 Comptroller deadline and any Secretary of State periodic-report notice. You provide the information; we handle the state-facing paperwork and return your file-stamped documents.

What does Mainstay Filing not do?

We are not a law firm or an accounting firm. We do not draft your limited partnership agreement, decide who should be the general partner, or advise on the tax treatment of contributions and distributions. For an LP — where the general partner carries personal liability — those decisions warrant an attorney and a CPA, ideally before you file.

Can you help if my LP was formed in another state?

Yes. If your out-of-state LP is transacting business in Texas, we can handle the foreign registration filing and serve as your Texas registered agent, then keep you current on the franchise tax and periodic-report obligations for as long as you operate here.