While it would be great to come up with an idea and create a business all on our own, it usually takes a little help. Sometimes that means having a full-fledged partner along for the ride. That in itself brings about a whole slew of questions and consequences with it.
If you are planning to start a partnership with someone, there are more than a few factors to keep in mind. Here are some of the most important as you start a partnership for your business.
Not all partners are created equal. There are some who simply front the financing while others want to be a part of all the decision-making. That means knowing what type of partner you are dealing with.
General partners are the type who put in work, make decisions, and have liability for the obligations and debts of the partnership. A limited partner, meanwhile, contributes in some ways (usually money) but doesn’t make daily decisions pertaining to the business.
Registering Within Your State
Just because you agree to a partnership with someone does not make it legal. You need to go to your state’s website and look for the section pertaining to businesses and corporations. This is where you would register your business officially as a partnership.
This is where things get a little complicated. If your company will be doing business in more than a single state, then you would need to fill out that same registration within each state. The original state would be a “domestic” partnership while the subsequent states would be a “foreign” partnership.
Getting an EIN
When you are officially a business with a name, type, and location, you get your employer ID number from the Internal Revenue Service. Just about all businesses need an EIN whether they have employees or not.
The process is pretty simple and can even be done online. Just be aware of the fake EIN application websites. They will walk you through the application and then charge you; the IRS never charges.