How to create a Partnership?

By The Law Office of Yoel Molina.
 
A partnership is a loosely defined corporate entity made up of two or more individuals. You can create a partnership by just deciding to do business with another individual; you don't need to submit any paperwork to do so. Although you can create a partnership without legally documenting or registering the business, partnerships are nevertheless subject to the same tax and licensing regulations as other enterprises. A partnership agreement and business insurance are additional advantages that every partnership can take use of.
 
1. Pick a name for the partnership:
In the majority of states, partnerships may choose to utilize a fake business name or the surnames of the individual members (also known as a tradename or an assumed name). If you intend to operate under a fictitious business name, it must be distinct from those of any other state-registered businesses.
 
2. Create a Fake Business Name:
Until you meet your state's and your city's registration requirements, you cannot sell your services or products under a fictitious name. A name registration typically needs to be submitted to the state as well as the clerk's office in your city or town. Every filer must publish a statement in a local newspaper, which is mandated by many states and towns (the local agency will likely provide a list of approved publications). You must inform the licensing body that the publication requirement was met after the required amount of time (usually 4 weeks).
 
3. Create and finish a partnership contract:
It is not necessary to have a partnership agreement in order to form a partnership. But it's crucial to keep misunderstandings between you and your partners to a minimum. If they don't have a solid partnership agreement, even good-faith partners risk getting themselves into a legal fight.
 
4. Adhere to Regulatory and Tax Requirements:
The same licensing and tax registration requirements that are applicable to new businesses also apply to partnerships. Among these registrations are:
 
Employer Identification Number (EIN): Regardless of whether a partnership has employees, the IRS mandates that every partnership obtain an EIN. The IRS has assigned you a nine-digit number to use when filing your taxes. On the IRS website, you can register for an EIN without cost.
Business licenses: Depending on the kind of commercial activity you are involved in, your company may need to get business or professional licenses.
State tax registration: You may need to register for and pay taxes such as sales tax and use tax depending on your state and the nature of your business. For more information and registration, contact your state's tax authority.
Employer registration: If you intend to hire staff, find out what your state's requirements are for employer registration. You have to pay taxes on unemployment and workers' compensation in the majority of states.
 
5. Get Insurance:
Due to the fact that partners in a partnership are individually liable for all debts and obligations of the company, a business liability insurance coverage may be your only source of protection from unanticipated circumstances. In the case of a lawsuit or other claim against your company, having sufficient business liability insurance can shield your personal assets as well as the assets of your company.
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If you have any questions about this article or similar matters please contact our office, Law Office of Yoel Molina, P.A., at fd@molawoffice.com or at 305-548-5020, option 1
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