What is a General Partnership?
A general partnership is a business structure that consists of multiple owners, called general partners. Taxes are paid by the owners based on their personal income tax returns. The partnership is required by the IRS to file a return showing how profits were divided amongst the owners. While a general partnership is relatively easy to maintain, it does not provide asset protection to the business owners if the business is sued.
With the help of an experienced attorney, setting up a general partnership can be easy. Firstly, we will determine if your desired business name is available and does not violate any trademarks registered with Pennsylvania and will register the name for you. Once the business name is registered, we will publish the required notice of inappropriate legal and general circulations. We will then draft the partnership agreement. The partnership agreement is not legally required in the state of Pennsylvania, but a well-written agreement can help resolve disputes and avoid lengthy legal battles.
A good partnership agreement will address:
- allocation of losses and profits,
- partnership contributions such as money, property, and services,
- Authorities/responsibilities of partners
- Voting and decision making
- Buying out a partner, withdrawal of a partner, and changes in ownership
- Steps to be taken in event of the death of a partner, bankruptcy, etc.
Once the partnership agreement has been drafted and executed by each partner, we will obtain the Employer Identification Number (EIN). The EIN is a number issued by the IRS and is used for tax reporting purposes and for opening bank accounts in the business’s name. Pennsylvania issues multiple tax IDs. For example, if your business sells corn dogs but also has employees, you will need separate tax account numbers for sales tax and employer withholding tax. Rick Stock Law will not only help you to determine which tax designations are necessary but will then ensure your business is run legally by obtaining the appropriate licenses and permits.
We assist small businesses with opening bank accounts, liability issues, compliance with employment law, and reporting taxes. If you’d like to speak with an attorney about a potential partnership, click the here to speak with attorney Charles Rick and learn more about how we can help your small business!