Partnership Disputes: Debts And Other Financial Obligations
You put a lot of trust and faith in the hands of your business partner. When a partnership runs into some financial troubles, it is crucial that your best interests are properly protected. You may be wondering: Can I be held liable for the debt of a business partnership? The answer depends on several different factors, including the structure of your partnership and terms of your partnership agreement. In this article, our Miami partnership dispute lawyers highlight the key things to know about partnership debts and other outstanding financial obligations.
The Structure of Your Business Partnership Matters
Not all business partnerships are created equal. In Florida, there are actually four different types of business partnerships. The specific structure of your business partnership will have important implications for your rights and responsibilities, including for your potential liability for debt. Here are the key things to know about the different types of business partnerships in Florida:
- General Partnership (GP): The simplest entity to form, a general partnership offers no liability protection. Each partner may be liable for the debts of the business.
- Limited Partnership (LP): With a limited partnership, certain members have no control over management, but liability limited to the scope of their investment. With LPs, there is always one or more general partners.
- Limited Liability Partnership (LLP): While an LLP is still operated as a pass-through business entity, partners are able to obtain some liability protection. They may not be personally liable for certain debts taken on by the business.
- Limited Liability Limited Partnership (LLLP): With a limited liability limited partnership in Florida, there are some members that have liability limited and no control over the management of the business.
Look to the Terms of Your Partnership Agreement
The specific type of business partnership that you are a member of will have an important impact on your potential liability. If you are a general partner, it is presumed that you could be held personally liable for debts of the business. If you are a member of an LLP, you may have additional legal protection. Make sure you have the proper business structure in place for your needs.
Additionally, your partnership agreement will also control your rights and responsibilities. Every partnership in Florida should be based on a professionally-drafted partnership agreement. You can use your partnership agreement to ensure that you are properly protected from any potential liability from debts incurred by your business partner.
Call Our South Florida Partnership Dispute Attorneys for Immediate Help With Your Case
At Pike & Lustig, LLP, our Florida business litigation lawyers are committed to providing top level legal representation to clients. If you have any questions about debt and partnership disputes, we are here to help. Get in touch with us by phone or send us a direct message to arrange your fully confidential case review. From our law offices in Miami-Dade County and Palm Beach County, our business lawyers handle partnership disputes and partnership litigation throughout South Florida.
