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What are the steps to form a partnership?

As opposed to businesses created by sole proprietors one of the most common ways to create a business is to form a partnership. Two types of partnerships can be created, the limited liability and the general partnership. Both structures are relatively easy to create and generally follow the same procedure although the limited liability partnership requires much more attention to organizational details so taking advice from a specialized lawyer is ideal.

The first task to perform will be for the partners to choose a name and the first task to perform is to choose a name you have to be careful that the name chosen does not violate the trademark of any other business, there are different ways to check if this name is already registered by another company, through your local Secretary of State’s office you can perform an online search on the site U.S. Patent and Trademark Office (USPTO) as well as perform a search of registered business owners.

You can do this in the state in which you live or in the state in which you intend to do business. Choosing the state in which you will form a partnership does not have as many effects as it has on corporations because the regulation of these types of organizations is practically the same throughout the country.

At the point when a verbal partnership agreement is utilized, there might be resulting disagreements among the proprietors sometime in the not too distant future. Subsequently, it bodes well to make a composed record that states how certain circumstances are to be taken care of his partnership agreement ought to at any rate cover the accompanying themes:

  • The rights and obligations of each partner
  • Regardless of whether accomplices are assigned as broad accomplices or restricted accomplices
  • The extents of partnership additions and misfortunes to be distributed to each accomplice
  • Systems identified with the withdrawal of assets from the partnership, just as any constraints on these withdrawals
  • How key choices are to be settled
  • Arrangements concerning how to include and end accomplices
  • What befalls partnership interests if an accomplice kicks the bucket
  • What steps to follow to break up the partnership
  • The extents of lingering money paid out to the accomplices in a liquidation

In addition to the partnership agreement, the partners must engage in several other formation activities that are common to all types of businesses.

These actions include:

  • Register the business name
  • Obtain an employer identification number
  • Obtain any licenses required by governments where the partnership plans to operate
  • Open a bank account in the name of the partnership
  • File an annual information return with the Internal Revenue Service

Get an employer identification number (EIN) and open a bank account that will allow you to separate your business income from your account which will facilitate your tax return. Go to local offices and obtain information about any licenses or permits you may need to operate a business regularly.