Louisiana at a glance
Partnership law
Civil law
LLC default split
Proportional to capital
Operating agreement
Not required
Community property
Yes
Formation cost
$100
Annual cost
$35 annual report fee
Louisiana is the only state that follows neither UPA nor RUPA. Its partnership law derives from French civil law and is governed by Civil Code Articles 2801-2835. Louisiana's forced heirship rules can create unintended business co-owners when a partner dies, as certain heirs have a legal right to a portion of the estate that cannot be disinherited. Louisiana is also a community property state where business income is treated as community property.
Default partnership rules in Louisiana
Louisiana is unique among US states in following a civil law tradition derived from French law rather than the common law tradition that produced UPA and RUPA. Partnership law is governed by Civil Code Articles 2801-2835. Partnerships in Louisiana are generally treated as separate entities, but the rules differ from both UPA and RUPA in important ways. Profits are shared in proportion to each partner's capital contribution by default (not equally, which is the UPA/RUPA default). A partnership terminates upon the death, interdiction, or bankruptcy of a partner unless the partnership agreement provides otherwise.
The most important takeaway: profits are split equally by default in Louisiana, regardless of capital contributions. If you and a partner start a business and one of you invests $100,000 while the other invests $5,000, you still split profits 50/50 without a written agreement. This is true in every US state, including Louisiana.
LLC defaults in Louisiana
Louisiana allocates LLC profits and losses in proportion to members' capital contributions by default. The state does not follow RULLCA. An operating agreement (called an 'operating agreement' or 'articles of organization' provisions) is not legally required but is strongly recommended. Louisiana LLCs must file an annual report with a $35 fee.
Louisiana defaults to proportional distributions based on capital contributions, which aligns better with many founders' expectations than equal-split states. However, capital contributions alone rarely tell the full story. A founder contributing time and expertise may receive nothing if they didn't invest cash. An operating agreement can account for all types of contributions. Our equity calculator can help you determine a fair arrangement.
What happens when a partner leaves in Louisiana
Under Louisiana's civil law, a partnership terminates upon the death, interdiction, or bankruptcy of any partner unless the partnership agreement provides otherwise. This is similar to UPA's automatic dissolution but operates under different legal principles. Louisiana's forced heirship rules add another complication: when a partner dies, certain heirs (children under 24, or children of any age with disabilities) have a legal right to a portion of the deceased partner's estate that cannot be overridden by a will. This can result in the deceased partner's share of the business passing to heirs who have no interest in or capacity for running the business.
Important: Louisiana's civil law system operates differently from both UPA and RUPA. A partner's death can terminate the partnership, and forced heirship rules can create unintended co-owners. Work with a Louisiana attorney familiar with civil law partnerships.
Marriage and business equity in Louisiana
Louisiana is a community property state, and income from a separately owned business is treated as community property. This means the non-owning spouse has a claim to half of the business income earned during the marriage, even if they had no involvement in the business. Louisiana's community property regime is rooted in its civil law tradition and operates somewhat differently from other community property states. Founders in Louisiana should strongly consider prenuptial agreements to protect business interests, and should be aware that forced heirship rules can also affect succession planning.
Critical for Louisiana business owners: Income from your separately owned business is community property in Louisiana. Your spouse has a claim to half of the business income earned during the marriage, even if they have no involvement in the business. A prenuptial or postnuptial agreement is strongly recommended to protect business interests.
Formation and cost considerations in Louisiana
| Formation cost | $100 |
| Annual/recurring cost | $35 annual report fee |
| State income tax | Yes |
| Partnership law | Civil law (Louisiana Civil Code Articles 2801-2835) |
| LLC default distributions | Proportional to capital contribution |
| Operating agreement | Not required (strongly recommended) |
Frequently asked questions
Why is Louisiana's partnership law different from every other state?
Louisiana's legal system is based on French civil law rather than English common law, making it unique among US states. Louisiana never adopted UPA or RUPA. Instead, partnership law is governed by Civil Code Articles 2801-2835. The rules differ in important ways: profits default to proportional sharing (not equal), and a partner's death can terminate the partnership.
What are Louisiana's forced heirship rules and how do they affect businesses?
Louisiana's forced heirship rules give certain heirs (children under 24, or children of any age with disabilities) a legal right to a portion of a deceased person's estate that cannot be disinherited. If a business partner dies, their share of the business may pass to forced heirs who have no interest in or capacity for running the business. This can create unintended co-owners and complicate business succession.
How does community property work for Louisiana businesses?
In Louisiana, income from a separately owned business is community property. The non-owning spouse has a claim to half of the business income earned during the marriage. This is more aggressive than states like California, where business income from separate property stays separate.
How much does a Louisiana LLC cost?
Louisiana LLC formation costs $100, and the annual report fee is $35. These are moderate costs. Louisiana also imposes a state income tax on business income.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 50 states: partnership and LLC default rules
Partnership laws in neighboring states
Disclaimer: This page provides general information about Louisiana partnership and LLC default rules and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and annual fees listed are approximate and may vary. Consult a qualified attorney licensed in Louisiana for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
Replace Louisiana's defaults with a fair agreement.
Equity Matrix tracks contributions and calculates ownership automatically, so your agreement reflects what your team actually built together.