How would I form a partnership if I already own the business?
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A partnership is a business enterprise entered into for profit which is owned by more than one person, each of whom is a "partner." A partnership agreement may provide for certain division of management, shares of investment, profit and/or rights to buy out a partner upon leaving the partnership or death. A partnership which does business under a trade name must file a certificate of "doing business under a fictitious name," or DBA notice, with the county or state, giving public notice of the names of partners and the business address. Unlike corporations, limited liability companies, limited partnerships, and limited liability partnerships, owners of a business do not need to follow specific formalities to form a general partnership. At the same time, however, partners are not protected from liability for the business' debts. Sole proprietorships and general partnerships are considered the "default" forms of business when an individual or more than one individual establish a business, since one form of business entity or the other is generally established if the parties do not choose an alternate form. The majority of states have adopted the Revised Uniform Partnership Act, though some have retained the Uniform Partnership Act.
There are several types of partnerships- general partnerships, limited partnerships, and limited liability partnerships. A general partnership is a form of business entity in which two or more co-owners engage in business for profit. There is no limit on the number or type of partners (i.e., individuals, other partnerships or corporations) to form a partnership. Generally, the business assets and business debts are jointly owned by the partners. The individuals involved are personally responsible for all debts and legal obligations of the business, including those incurred by the other partners when doing business on behalf of the company. A limited liablility partnership (LLP) is a general partnership that elects to be treated as an LLP by registering with the Secretary of State. In a general partnership, individual partners are liable for the partnership's debts and obligations whereas the partners in a limited liability partnership are statutorily provided full-shield protection from partnership liabilities, debts and obligations. It allows the members of the LLP to take an active role in the business of the partnership, without exposing them to personal liability for others' acts except to the extent of their investment in the LLP. In some states, with certain exceptions, the LLP is only available to attorneys and accountants. Limited partnerships are very different from general partnerships, and are usually set up by companies that invest money in other businesses or real estate. Limited partnerships have at least one general partner who controls the company's day-to-day operations, exercise managerial power, contribute capital, share in the profits and are held personally liable for all company debts and legal obligations. They also have passive partners called limited partners.
Individuals who are forming a general partnership or are concerned about management issues should consult their state statutes to determine which law is in effect in that state.
We can assist you with searching to locate forms or we can draft and add forms you may need to our database. However, we cannot advise you to use one particular form over another. We can show you what is available. A link to the available partnership forms is provided below, which includes a link to our partnership packages. The partnership packages include a simple partnership agreement, a sample complex partnership agreement, a buy sell agreement between partners in a partnership, a profit and loss statement and an agreement for dissolution of a partnership. You may order a form or package by phone by calling Toll Free: 1-(877) 389-0141 - 8:30-5:00 Central Time Zone Monday – Friday.