How to Start a Texas Limited Partnership — Step by Step

With an LLC you can leave the ownership question for the operating agreement. With a limited partnership you cannot, because the general partner is named on the public certificate and carries personal liability for the partnership's debts. This decision comes first, before you file anything.

The unlimited liability problem

A general partner is fully exposed. If the LP is sued or cannot pay a creditor, that creditor can pursue the general partner's personal assets — home, savings, everything. A limited partner does not have this problem, but every LP must have at least one general partner, so someone has to sit in the exposed seat.

The common solution

Rather than putting an individual there, many Texas LPs make the general partner an LLC. You form an LLC, and that LLC becomes the general partner of the limited partnership. The LLC absorbs the unlimited-liability role, and the people behind the LLC keep the LLC's liability shield. It adds a second entity to form and maintain, but it removes the single biggest risk of the structure. Whether that extra layer is worth it depends on the size and risk of your venture — a question worth putting to an attorney before you file.

Your limited partnership needs a name that is distinguishable from every other business entity already on file with the Texas Secretary of State, and that name has to signal it is an LP.

Naming rules for a Texas LP

• The name must contain an approved designator: "Limited Partnership," "Limited," "L.P.," "LP," or "Ltd."
• It must be distinguishable in the records of the Secretary of State from existing entity names — not merely different by an "s," an ampersand, or a "the."
• It cannot imply a government affiliation or use restricted words (such as "bank" or "insurance") without the required regulatory approval.

Checking availability

You can run a preliminary name check through SOSDirect, which charges a small per-search fee, and review the Secretary of State's name filing FAQs for how "distinguishable" is actually applied. If you are not ready to file but want to hold the name, Texas allows a name reservation for a set period. And if you intend to operate under a different name than your LP's legal name, that is a separate assumed name (DBA) filing on Form 503, valid for up to ten years.

Before the certificate can be filed, you need a registered agent lined up. The agent is named in the certificate and must consent to serve — Texas provides a written consent form (Form 401-A) for this purpose.

Who can serve

• An individual Texas resident with a physical Texas street address who agrees to accept documents during business hours.
• A commercial registered agent service, which keeps a professional address on the public record instead of yours and guarantees someone is always available to receive service of process.

The registered agent must have a real Texas street address — a P.O. box does not qualify — because the entire function is to be a reliable place where lawsuits and official notices can be hand-delivered. The LP cannot be listed as its own agent, though a partner can serve individually. Many partnerships use a commercial service specifically so a general partner's home address stays out of the searchable public record.

The Certificate of Formation for a limited partnership is the document that legally creates your LP. You file it with the Texas Secretary of State, most efficiently through SOSDirect, or by upload or mail.

What the certificate includes

• LP name with the required designator
• Registered agent name and Texas street address, with consent to serve
• Principal office address in the United States
• Each general partner's name and address — general partners are public; limited partners are not
• A purpose statement, usually a broad "any lawful purpose" clause
• Organizer signature — the person forming the entity

Processing and expediting

Online SOSDirect filings generally process in a few business days; mail runs much longer. If a deadline is bearing down — an investor closing, a lease, a bank account — Texas offers expedited processing for an extra per-document fee. Once accepted, the LP exists as of the effective date, and you receive the file-stamped certificate as proof of formation.

Texas does not require you to file a partnership agreement, and you should not — it stays private. But you absolutely should have one in place, and for an LP it matters even more than an LLC's operating agreement because the whole entity is built on the different rights of two classes of partner.

What the agreement needs to settle

• Capital contributions: what each partner puts in, and whether more can be called for later
• Profit and loss allocation: how returns are split — often not equal, and often tied to capital rather than headcount
• Distributions: when and in what priority cash goes back to partners
• General partner authority: what the GP can decide alone and what requires limited-partner consent
• Limited partner rights and limits: information rights, voting on major events, and the management activities they must avoid to keep liability protection
• Transfers and admission: how interests can be sold and how new partners join
• Dissolution and buyouts: what happens when a partner exits or the venture winds down

Without this document, the default rules of the Texas Business Organizations Code fill every gap — and those defaults rarely match what the partners actually intended. A dedicated limited partnership agreement page on this site covers these provisions in more depth.

An Employer Identification Number is the partnership's federal tax ID, issued free by the IRS. A limited partnership needs one — it is not optional the way it can be for a single-member LLC.

Why an LP always needs an EIN

• A partnership files its own federal return (Form 1065) and issues each partner a Schedule K-1; that requires an EIN.
• Banks require an EIN to open a partnership account.
• If the LP hires employees, the EIN is mandatory for payroll.

How to apply

Apply online at IRS.gov through the EIN Assistant. Plan on about ten minutes to complete it; because the number comes through right away, you can print the confirmation and put it to work the same day. The online application needs a responsible party with a US Social Security number or ITIN; those without one apply by fax or mail using Form SS-4.

Separate finances are what make the liability lines real. Commingling partnership money with a partner's personal accounts undermines the structure you just built and can hand a court a reason to disregard it.

What a bank typically wants

• The file-stamped Certificate of Formation
• The IRS EIN confirmation
• The limited partnership agreement (many banks ask for it)
• ID for the authorized signers, usually the general partner

Your recurring obligations

Texas will not mail you a Secretary of State annual report. Instead, mark May 15 for the Comptroller franchise tax report and information report — file it every year even if you owe no tax. Watch, too, for any Secretary of State periodic-report request, which arrives on an irregular cycle and must be answered within the stated window. Keep your registered agent current, and handle any state-level licensing your specific industry requires. A dedicated annual-requirements page on this site lays out the full cadence.