How to Start a Business Partnership

Step 1
Decide if this will be a general, limited or limited liability partnership. A general partnership is composed of two or
more people who share responsibilities and decisions. A limited partnership contains at least one general partner and
one or more limited partners who may contribute funding but do not have an equal say or responsibility to the
company. A limited liability partnership, or LLP, does not have any general partners only limited partners.

Step 2
Meet with your partner (or partners) in-person to discuss every detail of the proposed partnership and outline terms.
Discuss each partner's role in the company.

Step 3
Draw up an official partnership agreement with the other party. This agreement outlines the partnership type as
determined in the previous step, amount of ownership of each party, entitlement to profits and specific management
duties. It also outlines the term of the partnership if it has a definite end, the business purpose and an exit strategy if
one or more partners wishes to withdraw from the business.

Step 4
Secure an Employer Identification Number for the new business and register the partnership with your state (See
Resources). You may have to file a copy of your partnership agreement along with your registration application. Get
any licenses or permits required to operate your type of company (See Resources).

Step 5
Open a joint business bank account for both partners to access. This is where you will deposit revenues and pay bills
on behalf of the company. Talk to your bank representative about restrictions on the account, such as a requirement
to have the signature of all partners on large withdrawals or checks.

Checklist: Starting a Partnership

If you are thinking of starting a partnership, below is a checklist of steps to take before you open for
business. Keep in mind that your partnership's start-up requirements might vary from the list below,
depending on the specific type of business you are in, and where your business is located.
1. Decide on a business name for your partnership.
2. Search availability of your partnership's chosen business name, and for similarity to existing
names.
3. Register your partnership name
4. Create and sign a written partnership agreement.
5. Register your partnership by filing a "certificate" or "registration" of partnership with the Secretary
of State office. This step is required most often for limited liability partnerships (LLPs) and limited
partnerships, as opposed to general partnerships.
6. Obtain business licenses and permits for your partnership from:

The federal government.

Your state government.
Your local government.

Forming a partnership can be a long-term benefit to your new business in the long run, but the process -most notably drafting a comprehensive partnership agreement -- can be complicated. To ensure that your
new partnership covers all legal bases and has the best chance for success before opening for business,
you may wish to consult an experienced business attorney.

Forming a Partnership
Here are the general steps you need to follow in order to form a partnership in compliance with applicable laws. Make
sure to consult your state page for state-specific details.
1. Choose a business name for the partnership and check for availability.

Please see our section on choosing and checking the availability of a name for your small business, as well as
our section on the trademark law aspects of choosing a name.

2. Register the business name with local, state, and/or federal authorities.

If you will be operating a partnership under a business name that is different from the partners' names, then
you will need to register the name as a "fictitious" or "assumed" business name (sometimes also called a
"trade name" or a "doing business as" filing). In most states, you do this at the local level by registering with
the county clerk's office in the county where the business is located. In other states, you may have to register
with the Secretary of State or another state agency in addition to registering at the local level. For more on
the requirements of state law, see the State Law: Forming a Partnership section. Fees and procedures may
vary from location to location, so you should contact your county clerk's office for specifics.

Although you are not required to do so, you should consider registering your business name as a federal
and/or state trademark. Please see the Trademark for Business Naming section for details.

3. Negotiate and execute a partnership agreement.

This step is not legally required, but it is highly advisable that partners execute a formal agreement. Please
see the Partnership Agreements section for details.

4. Obtain any required local licenses.

As a business doing journalism, you are not required to obtain any federal or state licenses or permits
relating to carrying on a particular trade. Most local or city governments, however, require every business to
obtain a basic business license, sometimes called a tax registration certificate. You get this license from your
city or county. The best way to get information about fees and procedures is to contact your county or city
clerk's office or other local government authority. The local chamber of commerce and other small business
owners might also be a good resource for information regarding local licenses and/or permits.

5. Determine what tax obligations the partnership has, and take care of any necessary registrations.

Partnerships need to apply for an Employer Identification Number (EIN) from the IRS. There is no filing fee.
You can apply for an EIN:
o by submitting the required information online at the IRS's website. The EIN is issued immediately
once the application information is validated;
o by telephone at 1-800-829-4933 from 7:00 a.m. to 10:00 p.m. in your local time zone; or
o by mailing or faxing Form SS-4, Application for Employer Identification Number. Instructions for
Form SS-4 are available on the IRS website.

If your partnership has an employee or employees (other than the partners), you likely will need to obtain a
state employer identification number or account for tax purposes. You will also have to report any new hires
as you make them. See the state pages on forming a partnership for details on state requirements.

You should be aware that, as the owner of a small business, you may be subject to additional federal, state
and local taxes and informational filing requirements, such as self-employment taxes and employment
withholdings and filings. Please see the Tax Obligations of Small Businesses section for details.

Although a partnership generally does not pay federal income tax at the entity level, it must file an
information return, Form 1065, annually with the IRS. This return shows the partnership's income,
deductions, and other required information, and must include the names and addresses of each partner, and
each partner's distributive share of taxable income. For more information on the federal tax obligations of
partnerships, see the IRS's page, Tax Information for Partnerships (includes links to forms and other
resources).

6. Open a bank account for your business.

It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this
early on is by opening a bank account for your business. You will probably need a Tax ID number (EIN) and
either a copy of the partnership agreement or your "fictitious" business name filing indicating the partners'
names. Here is one example of the documentation banks ask for.