Partnership and LLC default rules by state
Every state has default rules that govern your partnership or LLC when you don't have a written agreement. These defaults vary significantly and can determine how profits are split, what happens when someone leaves, and whether your spouse has a claim to your business.
| State | Partnership law | LLC default split | OA required | Community property | Formation cost |
|---|---|---|---|---|---|
| Alabama | RUPA | Equal | No | No | $200 |
| Alaska | RUPA | Proportional | No | Opt-in | $250 |
| Arizona | RUPA | Equal | No | Yes | $50 |
| Arkansas | RUPA | Equal | No | No | $45 |
| California | RUPA | Equal | Yes | Yes | $70 |
| Colorado | RUPA | Proportional | No | No | $50 |
| Connecticut | RUPA | Equal | No | No | $120 |
| Delaware | RUPA | Proportional | Yes | No | $110 |
| Florida | RUPA | Proportional | No | Opt-in | $125 |
| Georgia | UPA | Proportional | No | No | $100 |
| Hawaii | RUPA | Proportional | No | No | $50 |
| Idaho | RUPA | Equal | No | Yes | $100 |
| Illinois | RUPA | Equal | No | No | $150 |
| Indiana | UPA | Proportional | No | No | $95 |
| Iowa | RUPA | Equal | No | No | $50 |
| Kansas | RUPA | Proportional | No | No | $85 |
| Kentucky | RUPA | Proportional | No | Opt-in | $40 |
| Louisiana | Civil Law | Proportional | No | Yes | $100 |
| Maine | RUPA | Proportional | Yes | No | $175 |
| Maryland | RUPA | Proportional | No | No | $100 |
| Massachusetts | UPA | Proportional | No | No | $500 |
| Michigan | UPA | Proportional | No | No | $50 |
| Minnesota | RUPA | Equal | No | No | $155 |
| Mississippi | RUPA | Proportional | No | No | $50 |
| Missouri | RUPA | Proportional | Yes | No | $50 |
| Montana | RUPA | Proportional | No | No | $35 |
| Nebraska | RUPA | Equal | No | No | $100 |
| Nevada | RUPA | Proportional | No | Yes | $425 |
| New Hampshire | UPA | Proportional | No | No | $100 |
| New Jersey | RUPA | Equal | No | No | $125 |
| New Mexico | RUPA | Proportional | No | Yes | $50 |
| New York | UPA | Proportional | Written | No | $200 |
| North Carolina | UPA | Proportional | No | No | $125 |
| North Dakota | RUPA | Equal | No | No | $135 |
| Ohio | RUPA | Proportional | No | No | $99 |
| Oklahoma | RUPA | Proportional | No | No | $100 |
| Oregon | RUPA | Proportional | No | No | $100 |
| Pennsylvania | UPA | Equal | No | No | $125 |
| Rhode Island | RUPA | Proportional | No | No | $150 |
| South Carolina | UPA | Proportional | No | No | $110 |
| South Dakota | RUPA | Equal | No | Opt-in | $150 |
| Tennessee | RUPA | Proportional | No | Opt-in | $50 per member ($300 minimum) |
| Texas | RUPA | Proportional | No | Yes | $300 |
| Utah | RUPA | Equal | No | No | $59 |
| Vermont | RUPA | Equal | No | No | $125 |
| Virginia | RUPA | Proportional | No | No | $100 |
| Washington | RUPA | Equal | No | Yes | $200 |
| West Virginia | RUPA | Proportional | No | No | $100 |
| Wisconsin | RUPA | Proportional | No | Yes | $130 |
| Wyoming | RUPA | Equal | No | No | $100 |
Alabama
Formation: $200 | Annual: $100 annual report fee
Alaska
Formation: $250 | Annual: $100 biennial report fee
Arizona
Formation: $50 | Annual: No annual report fee
Arkansas
Formation: $45 | Annual: $150 annual franchise tax
California
Formation: $70 | Annual: $800 annual franchise tax
Colorado
Formation: $50 | Annual: $10 annual report fee
Connecticut
Formation: $120 | Annual: $80 annual report fee
Delaware
Formation: $110 | Annual: $300 annual franchise tax
Florida
Formation: $125 | Annual: $138.75 annual report fee
Georgia
Formation: $100 | Annual: $50 annual registration fee
Hawaii
Formation: $50 | Annual: $15 annual report fee
Idaho
Formation: $100 | Annual: No annual report fee
Illinois
Formation: $150 | Annual: $75 annual report fee
Indiana
Formation: $95 | Annual: $31 biennial report fee
Iowa
Formation: $50 | Annual: $45 biennial report fee
Kansas
Formation: $85 | Annual: $55 annual report fee
Kentucky
Formation: $40 | Annual: $15 annual report fee
Louisiana
Formation: $100 | Annual: $35 annual report fee
Maine
Formation: $175 | Annual: $85 annual report fee
Maryland
Formation: $100 | Annual: $300 annual report fee
Massachusetts
Formation: $500 | Annual: $500 annual report fee
Michigan
Formation: $50 | Annual: $25 annual report fee
Minnesota
Formation: $155 | Annual: No annual report fee
Mississippi
Formation: $50 | Annual: No annual report fee
Missouri
Formation: $50 | Annual: No annual report fee
Montana
Formation: $35 | Annual: $20 annual report fee
Nebraska
Formation: $100 | Annual: $10 biennial report fee
Nevada
Formation: $425 | Annual: $150 annual list fee + $200 business license
New Hampshire
Formation: $100 | Annual: $100 annual report fee
New Jersey
Formation: $125 | Annual: $75 annual report fee
New Mexico
Formation: $50 | Annual: No annual report fee
New York
Formation: $200 | Annual: $25 biennial statement fee + publication costs
North Carolina
Formation: $125 | Annual: $200 annual report fee
North Dakota
Formation: $135 | Annual: $50 annual report fee
Ohio
Formation: $99 | Annual: No annual report fee
Oklahoma
Formation: $100 | Annual: $25 annual report fee
Oregon
Formation: $100 | Annual: $100 annual report fee
Pennsylvania
Formation: $125 | Annual: $7 annual report fee
Rhode Island
Formation: $150 | Annual: $50 annual report fee
South Carolina
Formation: $110 | Annual: No annual report fee
South Dakota
Formation: $150 | Annual: $50 annual report fee
Tennessee
Formation: $50 per member ($300 minimum) | Annual: $50 per member annual report fee ($300 minimum)
Texas
Formation: $300 | Annual: Franchise tax (most small businesses pay $0)
Utah
Formation: $59 | Annual: $18 annual renewal fee
Vermont
Formation: $125 | Annual: $35 annual report fee
Virginia
Formation: $100 | Annual: $50 annual registration fee
Washington
Formation: $200 | Annual: $60 annual report fee
West Virginia
Formation: $100 | Annual: $25 annual report fee
Wisconsin
Formation: $130 | Annual: $25 annual report fee
Wyoming
Formation: $100 | Annual: $60 annual report fee (or $60 minimum based on assets)
No states match your search.
Key differences that matter
UPA vs RUPA: what happens when someone leaves
9 states still follow the original UPA, where a partner's departure automatically dissolves the partnership. The remaining partners must wind up affairs and reform. In the 40 states with RUPA (plus Louisiana's civil law), the partnership continues and the departing partner is bought out at fair value.
This single distinction is why a written partnership agreement matters most in UPA states like Georgia, Indiana, Massachusetts, Michigan, New Hampshire, New York, North Carolina, Pennsylvania, and South Carolina.
LLC splits: equal vs proportional
18 states that adopted RULLCA default to equal per-capita distributions, meaning every member gets the same share regardless of capital contribution. The remaining states default to distributions proportional to capital.
The equal-split default catches many founders off guard. If you contributed 80% of the capital in a RULLCA state, you still split profits equally with your partner unless your operating agreement says otherwise.
Community property: when your spouse has a claim
9 states are mandatory community property states, where assets acquired during marriage are owned equally by both spouses. The critical question is how each state treats business income from a separately owned business.
Texas, Idaho, Louisiana, and Wisconsin treat business income as community property, giving the non-owning spouse a direct claim. California, Arizona, Nevada, New Mexico, and Washington generally keep business income separate.
Operating agreements: only 5 states require one
Only California, Delaware, Maine, Missouri, and New York require an operating agreement. Of these, only New York requires it in writing. The other four accept oral agreements.
Even in the 45 states that don't require one, operating without a written agreement means your LLC is governed entirely by state default rules. The average cost to draft an agreement is around $840. The average cost of equity litigation: over $100,000.
Why these default rules matter for your business
Every state's default rules were designed for the general case. They assume equal contributions, equal effort, and equal risk. In reality, most partnerships and LLCs involve unequal contributions that change over time.
Without a written agreement, your business is governed by rules that almost certainly don't match your actual arrangement. A written equity agreement overrides these defaults and protects everyone involved. Tools like our equity calculator can help you figure out a fair starting point.
Looking for European partnership laws?
Our European directory covers 32 countries: default partnership splits, startup entity types, minimum capital requirements, formation costs, and community property rules across the UK, Germany, France, and 29 more.
View European directoryFrequently asked questions
What is the default profit split for a partnership?
In all 50 US states, general partnerships default to equal profit sharing among all partners, regardless of how much capital each partner contributed. This is true in both UPA and RUPA states. If one partner invested $90,000 and another invested $10,000, they still split profits 50/50 unless a written partnership agreement says otherwise.
What is the difference between UPA and RUPA?
UPA (Uniform Partnership Act) treats partnerships as an aggregate of the individual partners. Under UPA, when any partner leaves, the partnership automatically dissolves. RUPA (Revised Uniform Partnership Act) treats the partnership as a separate entity. Under RUPA, a partner can leave without dissolving the partnership — the remaining partners can continue the business and buy out the departing partner. About 40 states have adopted RUPA, while 9 states still use the original UPA.
Do LLCs require an operating agreement?
Only 5 states require an operating agreement: California, Delaware, Maine, Missouri, and New York. Of these, only New York requires it to be in writing. However, even in states that don't require one, an operating agreement is strongly recommended for any multi-member LLC. Without one, the LLC is governed by state default rules that rarely reflect the founders' actual intentions.
What is the default profit split for an LLC?
It depends on the state. About 18 states that adopted RULLCA (including California, Idaho, and Wyoming) default to equal per-capita distributions. The remaining states (including Delaware, New York, and Florida) default to distributions proportional to each member's capital contribution. Either way, a written operating agreement can set any split the members agree on.
How does community property affect business ownership?
In community property states, assets acquired during marriage are generally owned equally by both spouses. The critical distinction is how each state treats business income: Texas, Idaho, Louisiana, and Wisconsin treat income from a separately owned business as community property, giving the non-owning spouse a direct claim. California, Arizona, Nevada, New Mexico, and Washington generally keep business income as separate property. Five additional states (Alaska, Florida, Kentucky, South Dakota, Tennessee) offer opt-in community property.
Don't let default rules decide your equity.
Equity Matrix helps founders track contributions and calculate fair ownership so you can replace state defaults with an agreement that reflects reality.