July 11th 2016 at 7:22pm Published by firstdownadmin

A partnership is a business organization with two or more persons as owners. Partnerships are governed by state laws, and a new partnership is registered with the state where it will be doing business.

Each partner shares in the organization’s profits (and losses) and may share in the business operations decisions. 

For tax purposes, the partners are taxed, not the business itself. That is, the partners pay their share of the taxes based on their share of the partnership, through their personal tax returns

One of the most significant benefits of general partnerships is how easy they are to set up. Unlike a limited liability partnership (LLP), corporation or limited liability company (LLC), you don’t need to register with your respective Secretary of State’s office to form your company. As a result, you also don’t need to submit a filing fee. Much like sole proprietorships, many states recognize general partnerships as soon as business activity begins.

The other benefit of a general partnership is that it’s easy to convert them to another business structure. For instance, if you eventually wanted to switch to an LLC for more liability protection, all you generally need to do is provide conversion paperwork to your local Secretary of State’s office. 

How to Start a Partnership in Easy Steps

  1. What a Partnership Means.
  2. Before You Go Into a Partnership.
  3. Step One: Make Decisions About Partners.
  4. Step Two: Decide on Partnership Type.
  5. Step Three: Decide on a Partnership Name.
  6. Step Four: Register Your Partnership With Your State.
  7. Step Five: Get an Employer ID Number.
  8. Step Six: Create a Partnership Agreement.

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