A Delaware limited partnership is formed by filing a Certificate of Limited Partnership with the Delaware Secretary of State for $200, and it stays in good standing on a $300 annual franchise tax with no annual report. Federal taxation passes through to the partners, and the partnership agreement — which never becomes public — controls almost every aspect of governance, including the ability to reshape or eliminate the fiduciary duties a general partner would otherwise owe. That contractual freedom is why Delaware dominates fund structures, real estate ventures, and family wealth planning.
How to Form a Delaware Limited Partnership
The Certificate of Limited Partnership is short. It must include the partnership’s name, the address and name of a registered agent in Delaware, and the name and address of each general partner.1Justia. Delaware Code Title 6 17-201 – Certificate of Limited Partnership Nothing else is required. Limited partners are not named on the public filing.
The name has to include “Limited Partnership,” “L.P.,” or “LP,” cannot duplicate an entity already on file, and cannot use “bank” unless the entity is actually a regulated bank.2Delaware Code Online. Delaware Code Title 6 Chapter 17 Subchapter I
The standard filing fee is $200.3Delaware Division of Corporations. Certificate of Limited Partnership Expedited processing is available at extra cost: $50 to $100 for next-day, $100 to $200 for same-day when submitted by 2:00 p.m. ET, and $500 for two-hour service when submitted by 7:00 p.m. ET.4Delaware Division of Corporations. Expedited Services Peak filing season can push actual processing beyond those windows.
The Partnership Agreement Is the Real Governance Document
The partnership agreement is not filed with the state, which keeps internal terms private. Delaware’s statute explicitly states that its policy is to give “maximum effect to the principle of freedom of contract.”5Delaware Code Online. Delaware Code Title 6 Chapter 17 Subchapter XI That principle is why sophisticated sponsors form here.
The agreement can cover profit allocation, voting rights, transfer restrictions, dispute resolution, and capital call procedures. It can also expand, restrict, or eliminate the fiduciary duties a general partner would otherwise owe to the partnership and to limited partners.5Delaware Code Online. Delaware Code Title 6 Chapter 17 Subchapter XI The only floor is the implied covenant of good faith and fair dealing, which cannot be eliminated.
Liability for breach of fiduciary duty or breach of contract can also be limited or eliminated, with one narrow carveout: the agreement cannot shield a bad-faith violation of the good-faith-and-fair-dealing covenant.5Delaware Code Online. Delaware Code Title 6 Chapter 17 Subchapter XI Private equity and hedge fund agreements routinely replace broad fiduciary standards with narrow, specifically defined obligations. A partner who relies in good faith on the provisions of the agreement is not liable for breach of fiduciary duty.
General Partners and Limited Partners
General Partners
General partners run the business. Unless the agreement says otherwise, a general partner has the same rights, powers, and liabilities as a partner in a general partnership under Delaware law.6Delaware Code Online. Delaware Code Title 6 Chapter 17 Subchapter IV That includes personal liability for the partnership’s debts to outside parties, and that liability is not waivable.
Management rights can be delegated to employees, officers, agents, or outside managers, and the delegation can be made irrevocable if the agreement permits. A person exercising delegated authority does not become a general partner just by doing so.6Delaware Code Online. Delaware Code Title 6 Chapter 17 Subchapter IV This is how fund structures typically use a thinly capitalized LLC as the general partner while day-to-day decisions run through investment professionals who carry no GP-level personal liability.
A judgment creditor of a general partner cannot reach the partner’s personal assets for a partnership debt until a judgment has been obtained against the partnership itself and remains unsatisfied.
Limited Partners
Limited partners contribute capital and share in profits. Their liability is capped at their investment. They face personal exposure only if they cross into participating in control of the business, and even then only to people who reasonably believed, based on the limited partner’s conduct, that they were actually a general partner.7Justia. Delaware Code Title 6 17-303 – Liability to Third Parties
Delaware defines “participation in control” narrowly. A limited partner can work for the partnership, advise or consult with the general partner, guarantee partnership debt, lend money to the partnership, attend meetings, serve on committees, vote on dissolution, asset sales, debt, changes in business purpose, or the admission or removal of partners, bring derivative suits, and help wind up the partnership after dissolution — all without losing limited liability.7Justia. Delaware Code Title 6 17-303 – Liability to Third Parties The breadth of that safe harbor is one of Delaware’s clearest competitive advantages over states with narrower rules.
Information Rights
Limited partners have a statutory right to information from the general partners, including financial condition reports, tax returns, a current partner list, copies of the partnership agreement, and contribution details. The demand must be in writing, state a purpose, and relate to the limited partner’s interest. The agreement can set reasonable standards for what is provided, when, and at whose expense, and agreements commonly do exactly that. General partners can also withhold trade secrets and other commercially sensitive information for as long as the general partner reasonably believes disclosure would harm the partnership.8Justia. Delaware Code Title 6 17-305 – Access to and Confidentiality of Information
How a Delaware LP Is Taxed
A Delaware LP is a pass-through entity for federal tax purposes. The partnership itself pays no federal income tax; each partner reports a share of income, deductions, and credits on their own return. The partnership files Form 1065 as an informational return.
Delaware does not impose a state-level income tax on limited partnerships as entities. Non-resident partners generally owe no Delaware income tax on partnership earnings unless the income is sourced to activities within the state. The only recurring state cost for the entity itself is the $300 annual franchise tax.9Division of Revenue – State of Delaware. Division of Revenue – Franchise Taxes
Self-employment tax splits along the general/limited line. General partners owe self-employment tax on their entire distributive share plus any guaranteed payments.10Internal Revenue Service. Entities For limited partners, federal law excludes the distributive share from self-employment tax.11Office of the Law Revision Counsel. 26 USC 1402 – Definitions Only guaranteed payments for services a limited partner actually performs are subject to self-employment tax. The combined self-employment rate is 15.3% on earnings up to the Social Security wage base, so the difference is meaningful for a limited partner receiving significant profit distributions.
Annual Compliance
Delaware limited partnerships do not file annual reports. The only recurring state obligation is the $300 franchise tax, due June 1 each year. A missed deadline triggers a $200 penalty and 1.5% monthly interest on the outstanding balance.12Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions The compounding is quick, and falling out of good standing can block the partnership from accessing Delaware courts and conducting ordinary business.
Every Delaware LP must maintain a registered agent with a physical office in the state.13State of Delaware Division of Corporations. FAQs Regarding Registered Agents The agent receives legal documents and government notices. It can be the partnership itself if it has a Delaware office, a Delaware resident, or another entity authorized to act in that role. Commercial registered agent services generally run $50 to $120 per year. Any change in agent or address should be updated with the Secretary of State promptly.
Doing Business Outside Delaware
Forming in Delaware does not authorize the partnership to operate anywhere else. If the LP maintains offices, employs workers, or regularly transacts with customers in another state, it will typically need to register there as a foreign limited partnership. Fees vary but usually run a few hundred dollars per state, often with additional annual costs.
Skipping foreign qualification has real consequences. A partnership that operates in a state without registering can lose the ability to sue in that state’s courts to enforce contracts or collect debts, and the state can impose back taxes, retroactive fees, and penalties covering the entire unauthorized period. Contracts signed while unregistered may be challenged as voidable in some cases.
What counts as “doing business” varies. Courts look at physical presence, local employees, and whether the partnership takes orders or has sales tax obligations there. Simply maintaining a bank account or engaging in interstate commerce generally does not trigger registration. When activity in a state is a gray area, getting a legal opinion before expanding is worth the cost.
Federal Beneficial Ownership Reporting
As of March 2025, FinCEN issued an interim final rule exempting all entities formed in the United States from Beneficial Ownership Information reporting under the Corporate Transparency Act.14Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting The redefined rule applies only to entities formed under foreign law that have registered to do business in a U.S. state. FinCEN has stated it will not enforce BOI penalties against domestic entities or their beneficial owners.15Financial Crimes Enforcement Network. FinCEN Not Issuing Fines or Penalties in Connection with Beneficial Ownership Information Reporting Deadlines A domestically formed Delaware LP has no BOI filing obligation as of 2026, though partnerships should watch for further rulemaking.
Dissolution and Cancellation
A Delaware LP dissolves on the first of the following: expiration of a stated term (if none is set, the partnership has perpetual existence); a partner vote (by default, all general partners plus limited partners holding more than two-thirds of the profit interest); withdrawal of the last general partner, unless the remaining partners vote within 90 days to continue and appoint a replacement; or the loss of all limited partners, with a similar 90-day cure period during which the personal representative of the last limited partner and all general partners can agree to continue.16Delaware Code Online. Delaware Code Title 6 Chapter 17 Subchapter VIII Agreements commonly soften these triggers, for instance dropping the two-thirds threshold to a simple majority or extending the cure period.
After dissolution, the partnership winds up and distributes assets in statutory order: creditors first (including partners who are also creditors), then partners’ outstanding distribution obligations, then remaining assets to partners as capital contributions and profit shares unless the agreement provides otherwise.17Justia. Delaware Code Title 6 17-803 – Winding Up
To formally end the entity, file a Certificate of Cancellation with the Secretary of State.18Justia. Delaware Code Title 6 17-203 – Cancellation of Certificate The fee is $200, and the certificate lists the partnership name, the original filing date, any registered series whose certificates remain active, and a future effective date if cancellation is delayed.19Delaware Division of Corporations. Delaware Certificate of Cancellation of Limited Partnership Outstanding franchise taxes must be settled before cancellation processes.