Learn the steps to create a General Partnership in Indiana or get started with us below.
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There are many great reasons for forming a general partnership in Indiana, including the ease of creation and pass-through taxation benefits. However, before committing to this business entity format, make sure to confirm that this format fits your business’s needs. In this article, we’ll discuss how to form a general partnership in Indiana.
We’ll also touch on some pros and cons of forming an Indiana general partnership.
A general partnership can be a great vehicle for many types of Indiana small businesses. However, not all businesses are great candidates for general partnerships, even if you plan to run them with only one other person. We’ve put together some pros and cons of forming a partnership in Indiana.
While you and your partner will ultimately be the best judges of whether to form a general partnership in Indiana, checking out the pros and cons might help you decide if you should run your business this way.
A general partnership can be a great business option because:
General partnerships are especially good for shorter-term ventures. That said, Indiana general partnerships don’t have the durability of business entities like LLCs or corporations. If your goal is to create a family legacy with your business or to pass your partnership interest down, other business entity types may be a better fit. Indiana general partnerships typically dissolve when one partner leaves the business or passes away.
Depending on what your business does, running a partnership in Indiana could make achieving your goals more difficult. Some of the pitfalls of running an Indiana general partnership include:
A trusted lawyer or accountant can give you additional insight on whether forming a partnership in Indiana aligns with your business goals.
While you don’t need to register as a general partnership with the Indiana Secretary of State (SOS), you may need to reserve or register your business’s fictitious, trade, or “doing business as” (DBA) name. Typically this only applies if your partnership name consists of something other than your name and your partner’s name. Many unregistered general partnerships use the names of their partners for their business name, which is the default rule in the state.
If you use a name for your business other than your own, you’ll need to file a “DBA” or “assumed business name” form. This form is filed with the Indiana Secretary of State. Indiana general partnerships typically file their assumed name forms with the clerk of the county where they do business.
If you’re not ready to use your assumed business name, you can reserve it with the Secretary of State for a small fee. We can also assist with this process. We have a DBA Service that helps Indiana businesses reserve their assumed business names so you can get up and running quickly.
An Indiana Partnership Agreement is the document that governs how your business is run. This document is the way you can make the rules for your Indiana general partnership. The types of rules your agreement might cover include:
In the absence of a Partnership Agreement, your business would have to rely on Indiana’s Uniform Partnership Act. The issue with relying on general laws is that they weren’t specifically created for your company. You have the ability to write many of your own rules for running your company! It’s wise to do so. Creating a partnership governing document helps give you flexibility and tailors your operational rules to fit your vision for your company.
Once you’ve formed your Indiana general partnership, you might have to obtain certain licenses, permits, and clearances before you can legally run your business. The licenses you need will depend upon the nature of the services your business provides, and to a certain extent, upon the location of your general partnership. Our partners at Avalara can help your business by compiling a Business License Report. This report helps identify your licensing and permitting needs at the local, state, and federal levels of government.
An Employer Identification Number (EIN) is like a social security number for your business. This is something your business partnership in Indiana obtains from the Internal Revenue Service (IRS) so it can pay its federal taxes. We can help get that task off your plate and communicate with the IRS for you with our Employer ID Number Service.
You may also need to register for a state tax ID, which is called an Indiana Taxpayer Identification Number (TIN). This is a number assigned by the Indiana Department of Revenue (IDOR), as opposed to the EIN number which is assigned by the US Internal Revenue Service. Not every Indiana general partnership needs a tax ID number. It may depend upon the type of business your general partnership conducts. Confirm with your accountant or another tax professional whether obtaining a state tax ID number is required for your business.
After you’ve formed your business, received permits and licenses, and set up your tax ID numbers, setting up a business bank account is your next logical step. Check with your personal bank and local credit union to see what accounts are offered for general partnerships in your area. You may also want to look into different types of business insurance, as well as potential office space.
Typically, an Indiana general partnership is one of the easiest business entities to get started. However, business compliance along the way can trip up even the savviest of business owners. This is part of what makes starting a new business so complex and time-consuming. Our suite of business development and maintenance services, including our Worry-Free Compliance Service, can help you throughout the entire life cycle of your business.
Once you’re ready to form a new business, we can help! We’re known for our fast, easy Indiana LLC and Indiana Corporate Formation Services. We can take the paperwork off your plate and let you get down to business faster.
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.
You don’t have to register a general partnership in Indiana with the Secretary of State. However, you’ll still register for a tax ID, business permits, and an assumed business name, if desired.
Indiana general partnerships don’t have to pay income taxes at the entity level. General partnerships enjoy pass-through taxation.
In general, a partner has a right to run the business and owns an interest in the business. An owner owns an interest in the company but doesn’t necessarily have the right to run the business.
You can form a general partnership by simply going into a for-profit business with one or more individuals.
In general, each partner is jointly and severally liable for the business’s debts.