Following is a list of year-end administrative issues for Texas limited partnerships and limited liability companies (“LP/LLC”):

  • Ensure that the LP/LLC’s activities, transactions, capital infusions (capital contributions or loan proceeds), and distributions are accurately reflected in the entity’s records;
  • Avoid causing the LP/LLC to make any distributions not in compliance with the terms of its LP/LLC agreement or applicable law; for example, an LP/LLC should not make disproportionate distributions to any owner (unless the LP/LLC agreement provides for such distributions);
  • Do not commingle LP/LLC assets with personal assets (e.g., using the LP/LLC’s checking account as your personal account) and do not use LP/LLC assets to pay for personal expenses;
  • Keep books and records sufficient to comply with income tax, Texas margin tax, and other tax reporting obligations, and to accurately determine each partner/member’s capital account;
  • Always retain sufficient cash and other liquid assets for your living expenses outside the entity;
  • Prepare and file any Texas margin tax return and pay any tax (as applicable) and consult with the entity’s accountant to confirm the due date of such return;
  • Prepare and file necessary federal, state, and local income tax returns, and complete other reporting requirements (e.g., Schedule K-1) and consult with the entity’s accountant to confirm the due date of any such return;
  • File necessary forms for any employees, such as Forms W-2 and W-3, Forms 940 or 940 EZ - Employer’s Annual Unemployment (FUTA) Tax Return, and Form 941 - Employer’s Quarterly Federal Tax Return, as applicable;
  • Conduct regular meetings of owners and maintain minutes of meetings (or execute unanimous consents in lieu of such meetings);
  • Review the LP/LLC agreement to ensure compliance with its management provisions (e.g., does the LP/LLC requirement necessitate additional approvals with respect to “major decisions” or other key decisions?);
  • Review salaries and compensation of managers, officers, or employees, as applicable, to ensure compensation is reasonable and in compliance with any approval requirements in the LP/LLC agreement;
  • Consider and review (i) indemnification provisions in LP/LLC agreement and (ii) insurance policies to determine whether there is adequate coverage; and
  • Review and maintain records relating to the business, affairs, and financial condition of the entity, including:
    • state filings (for example, periodic reports with the Texas Secretary of State);
    • federal, state, and local income tax returns;
    • current list of the name and address of each partner or member (including classes or groups of interests) and percentage or other interest owned by each partner or member; and
    • executed copies of any powers of attorney or documents that establish a class or group of interests.