Embark on a journey into the realm of general partnerships in the vibrant business landscape of Arkansas, where collaboration takes center stage, and delve into our comprehensive guide below to navigate the intricacies of establishing and thriving in this dynamic business structure.
An Arkansas general partnership doesn’t have any formal filing requirements, but there are plenty of things that you need to take into consideration. This article reviews the pros and cons of this particular type of business entity and the steps for how to form a general partnership in Arkansas.
General partnerships aren’t the only option for forming a legal entity, so it’s important to look at the pros and cons of a general partnership in Arkansas. Other business types to consider include an Arkansas limited liability company (LLC) or Arkansas corporation. These are more formal business entities that do require registration with the state.
If you decide to go that route, we can help you through the process with our Arkansas Limited Liability Company Formation Services and Arkansas Corporation Formation Services. Here are some things to consider when determining if you should form an Arkansas general partnership.
The most appealing thing about forming a general partnership in Arkansas is how simple it is to get started. You and your partners just start doing business together, and your partnership is formed. Partnerships don’t have ongoing maintenance fees such as annual reports or amendments to formal documents. As an added bonus, they’re subject to pass-through taxation. Unlike with corporations, taxes pass through to the personal tax return of individual partners. Partnerships are especially convenient for short-term business ventures.
The easy formation process is great, but it’s not always ideal for every business. An Arkansas general partnership doesn’t provide any personal liability protection for partners. All financial concerns such as business debts and legal obligations become the personal financial responsibility of you and your partners. The lack of formal structure may also make it difficult to raise capital and expand the business.
If you choose to do nothing else, the last names of you and your partners will be the name of your business. This may be fine if you’re not doing any marketing and your business is short-term. In the long run, it’s often a better idea to have a name that is recognizable to consumers and easy to associate with what it is that you do.
To use a different name, your business must file for an Arkansas DBA (doing business as). This is also known as an assumed name in Arkansas. Choose a name that satisfies all Arkansas naming rules. Make sure no other business has a similar name. Submit your DBA registration to the Secretary of State and then file with the county clerk in the county where you do business.
An Arkansas general partnership agreement isn’t necessary to operate the business, but it’s highly recommended. A partnership agreement outlines the roles and responsibilities of the partners. This helps resolve disputes that may arise later. Put all provisions in writing and file with other important company documents. There can be more than two partners in a partnership agreement.
If no partnership agreement is created, Chapter 42 of the Arkansas Uniform Partnership Act will govern all disputes related to the partnership.
Arkansas doesn’t have a state-wide business requirement. However, most cities require businesses to be licensed locally to operate. Rules for business registration differ for every location.
Make sure to obtain all necessary permits, clearances, and other licenses to conduct business. These are found at the local, state, or federal level. They are often specific to your industry. Trying to figure out exactly what you need can be time-consuming, and you have a lot of other things to do. Consider using our Business License Report service to identify the licenses and permits you need for your individual business.
An Employer Identification Number (EIN) is a nine-digit number issued by the Internal Revenue Service (IRS). You must have an EIN to file company taxes and open a business bank account. Acquiring your EIN is another task we can check off your list of things to do when forming your Arkansas general partnership.
Various state taxes may apply depending on the type of business you operate. The Arkansas Department of Finance and Administration oversees state business tax applications. Even though taxes are passed to individual partners and not paid by the business, you do need to file a partnership income tax report. This helps the state keep a record of how much revenue is flowing through the business sector.
Once you have settled on your name, drafted a partnership agreement, and obtained tax numbers, licenses, and permits, you’re ready to start running your Arkansas general partnership. Open a banking account under the business name to keep personal assets and business finances separate. Keep in mind that depending on your industry, you may also need business insurance.
Despite being relatively simple to start on day one, you will likely have to fulfill multiple licensing and tax registration requirements to keep your general partnership legally compliant. That’s where we excel. Our business development and maintenance services, and Worry-Free Compliance Service, can help you easily fulfill many of your business obligations.
Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
There are no formalities requiring you to register as a general partnership in Arkansas. Partners can basically just start doing business together. You will need to register for a DBA (if needed), obtain a federal tax ID, and meet other local requirements.
General partnerships don’t have to pay income taxes at the entity level. Taxes pass-through to the personal tax returns of individual partners. You do still have to file a partnership income tax report.
Generally, a partner has the ability to run the business and owns an interest in the business. They can transfer this interest, but that doesn’t automatically entitle the new owner to the same operational rights.
You can form an Arkansas general partnership just by starting to do business with another person. It’s advisable to create a partnership agreement to govern the details of the partnership. If there is no partnership agreement, state rules will apply.
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