A general partnership, by definition, is an unincorporated commercial entity that you own with one or more other people. It can be a pretty simple way to do business, but it’s not for everyone.
There are a few requirements you need to fulfill to form your business properly. Confused by business partnerships? Learn more about how partnerships are defined for business.
Follow our steps to create your general partnership.
Your general partnership needs a name. Your business name will go on tax paperwork, business accounts, and advertising. Many general partnerships are unregistered, and unregistered general partnerships often use the last names of all their general partners as their business name. This is a simple solution but maybe not the most exciting.
If you want your business’s name to be more than just a collection of surnames, you can normally register a fictitious name or a “doing-business-as” name (DBA name) with your state or local government. In general, the DBA name you choose needs to be distinguishable from other names already registered with the government.
It’s not a requirement in many states, but writing a Partnership Agreement can give you the control you’re likely looking for as a business owner. A Partnership Agreement can help you reduce some of the potentially negative aspects of running a general partnership, such as tough transfer-of-ownership rules.
Without a Partnership Agreement, your business normally has to follow the default rules your state has for general partnerships. Your state’s default rules might not be ideal for your needs. If you need help with writing your own rules, you can hop over to our page on How to Write Business Partnership Agreements for some pointers.
If you want a successful business, you need to make sure you pay your local, state, and federal taxes. To properly pay taxes at the federal level, your general partnership must have an Employer Identification Number (EIN).
You get your EIN from the IRS, or we can help you with our EIN Service. Your state and local governments might require you to obtain additional tax identification numbers from them so you can properly fulfill their tax requirements.
Normally, you don’t need to register a general partnership with your state to start one. But this doesn’t mean you don’t have other government paperwork to file as a business owner.
You will likely need some kind of business license to legally conduct your partnership. You might need more than one license to conduct business, and you might need them from the local, state, and federal governments.
Your license obligations often depend on the nature, location, and characteristics of your business. However, some states and cities require all businesses in their territory to have a general business license. Many business licenses require payment of filing fees and regular renewal.
If you use our Business License Report Service, we can compile a list of the licenses and permits your business needs at the federal, state, and local levels.
You want to make sure you keep your business’s finances as separate as possible. An important step in business ownership is opening a bank account for your business funds and earnings. You normally use your EIN to open a business bank account.
So what kind of general partnership should you start? Well, that’s really up to you. Almost any business idea can take the form of a general partnership. Some general partnership examples include:
A general partnership might be ideal for some of these business ideas, because you might have one or more partners who are good at interfacing with clientele or providing services, while other partners shine when it comes to handling finances and internal operations.
Like other business entities, there are general partnership advantages and disadvantages. We list common pros and cons here to help you determine if running a general partnership is the right choice for your new enterprise.
Even if you have a business partner, you can still use a helping hand. We can provide the kind of support that helps your hard work shine with our numerous business formation and maintenance services. Our Business Plan Template can help you easily map out a successful future. Once you’re up and running, our Worry-Free Compliance Service can help keep your business legally compliant. Obtaining an EIN can be time-consuming, but you can cut your time for this task by using our Employer ID Number Service.
If a general partnership is not for you, you might do better running a limited liability company (LLC) or corporation. We can help you get these types of businesses started quickly with our LLC Formation and Corporation Formation Services. We can also help you keep up with your Annual Report requirements for LLCs and corporations with our Annual Report Service. And when you’re ready to close shop, we can give you information on Ending a Business Partnership.
We’re here to save you time and stress so you’re free to use your talents to grow your business.
General Partnership FAQs
While both entities normally enjoy pass-through taxation, an LLC usually has more filing requirements for formation and provides more liability protection for owners than a general partnership.
General partnerships are often less formal than other entity types. General partnerships also expose their owners to more personal liability than many of the other entity types, but they sometimes have fewer tax obligations. You can visit our Compare Business Structures page to help you figure out which structure is best for you.
A general partnership can be a good choice because of its simplicity and straightforward rules on co-ownership. However, it’s best to speak to legal and financial professionals about which structure is ideal for you.
Yes. All general partnerships need an EIN from the IRS.Yes. Unless your partnership contains provisions restricting you from participating in other business ventures, you can be a partner in multiple general partnerships.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Written by Team ZenBusiness
ZenBusiness has helped people start, run, and grow over 700,000 dream companies. The editorial team at ZenBusiness has over 20 years of collective small business publishing experience and is composed of business formation experts who are dedicated to empowering and educating entrepreneurs about owning a company.
