Do you want to form a limited partnership (LP) in Wyoming, but you’re not familiar with the formation process?
A limited partnership can be a great alternative to a general partnership, but the LP is definitely more difficult to form compared to the more casual nature of the general partnership. In this guide, we’ll discuss all the crucial details of forming this business type in Wyoming.
What Is a Wyoming Limited Partnership?
There are several significant differences between the general partnership and the limited partnership (LP), starting with the roles of the partners themselves. With a general partnership, the partners split profits evenly and take equal responsibility when it comes to liability ― general partners are personally liable for the company’s debts and settlements.
With a limited partnership (not to be confused with the LLC), there is at least one general partner and one limited partner, which is the term for a partner that does not have managerial responsibilities, and their liability is limited to the amount of money they invested in the partnership.
Sometimes, you’ll hear limited partners referred to as “silent partners” due to their lack of direct involvement in the day-to-day operations of the company.
Another major difference is that the general partnership is not a formal business structure, which means you don’t even need to file formation documents with the state of Wyoming, or pay any sort of formation fee. The general partnership is simply formed when the partners begin transacting business together.
On the other hand, a limited partnership does have a formal formation process with the Wyoming state government, and there is also a formation fee involved.
How to Form a Wyoming Limited Partnership (in 6 Steps)
Step One) Choose an LP Name
Whereas the state of Wyoming allows general partnerships to operate under the individual names of the partners, that is not the case for limited partnerships, which must have a distinct business name.
Your limited partnership’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
In Wyoming, limited partnership names are required to include the exact words “Limited Partnership.” No abbreviations are allowed. In addition, you cannot include any words that refer to other business types (like “corporation” or “incorporated”), and you also can’t use words that are typically used to refer to specific kinds of businesses (like “bank” or “law office”).
Another aspect to consider is including language that explains what your business does ― for example, if you’re a realtor, put the phrase “real estate” in your LP name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?
At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your limited partnership’s name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming an LP is to not get too attached to any one business name until you have either reserved the name with the state of Wyoming, or you’ve officially formed your business.
Before reserving a name for your limited partnership, you’ll need to use the Business Center Search Tool to confirm the name is not already in use. After ensuring that your desired name is available, you may reserve it by filing the Application for Reservation of Trade Name with the Wyoming Secretary of State. After doing so, your limited partnership name will be held for a period of 120 days.
Step Two) Designate a Registered Agent
Every limited partnership in Wyoming is required to designate a registered agent, which is the individual or registered agent service that receives government correspondence on behalf of your business, then forwards those documents to you.
According to the Wyoming Secretary of State,
All business entities filed in Wyoming shall have and continuously maintain in this state a registered agent to accept service of process. Failure to maintain a registered agent results in the dissolution or revocation of the business entity.”
Without a registered agent in Wyoming, you could lose your good standing and the state also has the right to dissolve your LP if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
At the end of the day, we recommend designating a registered agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record.
Step Three) File the Certificate of Limited Partnership
At this point, it’s time to legally form your new limited partnership.
The form required to do this is a relatively simple, straightforward document known as the Certificate of Limited Partnership. In completing the form, you’ll need the following details:
- Name of the limited partnership
- Indication of whether or not the partnership elects to be an LLP
- Name and physical address of the initial registered agent
- Mailing address of the limited partnership
- Principal office address
- Name and business address of each general partner
- A detailing of the amount of cash and description of agreed value
- The latest date upon which the partnership is to dissolve
- The signatures of each general partner
The Certificate of Limited Partnership may be completed as a PDF and then mailed to the Wyoming Secretary of State. To see if your document is currently being processed, you may visit Wyoming’s Business Center.
Cost to Form an LP: The state of Wyoming charges a filing fee of $100 to form a limited partnership.
Processing Time: Generally, processing time for the document is 3-5 days following the date of receival. Submissions are processed in the order they are received; expedited processing is not available.
Step Four) Create a Limited Partnership Agreement
While not legally required by the state of Wyoming, a limited partnership agreement outlines some of the key operating principles of the business. Even though you don’t have to submit it to the state to form your LP, it’s still a vital document that describes the exact nature of the agreement between the general partners and limited partners.
The information included in a limited partnership agreement does vary depending on the nature of your business, the size of your company, and some other variables. In general, it’s good to get the following information down in writing:
- The term (in years) of your partnership
- Identities and roles of general and limited partners
- Initial capitalization and ongoing capital contributions
- Allocation of profits/losses
- Management structure
- Voting rights and meeting plans
- Accounting and record-keeping practices
- Conditions for transfer and dissolution
Step Five) Handle Taxation Requirements
Limited partnerships require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important LP functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LP for free through the IRS.
Unlike most states, Wyoming has neither a corporate income tax nor a personal income tax. Instead, limited partnerships are required to pay a license tax which is determined based on the company’s assets within Wyoming.
If you sell goods to customers within the state, it’s likely that you’ll also be required to pay sales tax. For general partnerships with employees, employer taxes will also be necessary.
More information on Wyoming limited partnership taxes can be found on the Department of Revenue’s website.
Depending on where in Wyoming your business is located, you may also need to pay local taxes.
Some municipalities in the state may have their own local tax requirements. To confirm that your limited partnership is paying all applicable taxes for the area in which your business operates, consult your local government office or country clerk.
Step Six) Obtain Business Licenses and Permits
Wyoming has no single, general business license, but there are several other state-issued and local licenses and permits your limited partnership may be required to obtain.
The majority of Wyoming’s licenses are either regulatory or occupational. Regulatory licenses are largely industry-specific, and pertain to agriculture, environmental protection, transportation, health, safety, and other similar areas. Occupational licenses, on the other hand, are dependent on profession.
More information on Wyoming licenses can be found through the Wyoming Business Council’s Business Permitting and Licensing Guide. In addition to state-level licenses, you’ll also need to check with your local government to ensure your limited partnership has all the permits and licenses needed to operate lawfully within your city or county.
Would You Prefer a Professional Form Your LP?
If you would rather have a professional take care of your formation paperwork for you, you have a couple of options. The less expensive choice is to hire a business formation service to create your limited partnership.
While some service providers stick to less complicated business entities like limited liability companies, some of our favorite options also provide LP formations ― namely, LegalZoom and BizFilings. Either one of them should do a great job forming your new LP.
If you want the maximum possible degree of expertise, you should also consider hiring a business attorney to form your limited partnership. This is certainly a more expensive route, but if you want the peace of mind that every step is completed correctly ― and that all of your options have been thoroughly explored ― hiring a lawyer is a great option.
Next Steps: What to Do After Creating a Wyoming LP
Open a business bank account
We highly recommend that you establish a business bank account so that your business and personal finances are maintained separately. This is important because it helps protect your personal assets, and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
If your Wyoming limited partnership has any employees, it will likely need to meet the state’s employer insurance requirements, specifically state unemployment insurance (UI) and workers’ compensation insurance. To obtain UI, you’ll need to register through the Wyoming Department of Workforce Services. This can be done online or by mail. Workers’ compensation insurance must be obtained through the Workers’ Safety and Compensation Division of the Wyoming Department of Employment. After you obtain these legally required policies, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies.
Income reportingLimited partnerships do not file business tax returns. Instead, the income is passed through the business entity to the partners, who then claim their share of profits or losses on their personal tax returns. Still, LPs do need to file an annual information return with the IRS, in which you report your business income, deductions, gains, and losses for the year.
Wyoming requires that all limited partnerships file an annual report in order to remain in good standing with the state. These reports are due each year on the first day of the anniversary month of the business’s formation. The annual report may be filed online using the Annual Report Wizard and carries a filing fee of $50.
We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how to manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.