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Starting a business in Minnesota doesn’t have to be difficult. It can be done quickly and easily, especially if your company is going to be small with just a few owners. The best business structure for a business like this may be a Minnesota general partnership.
This article will demonstrate how to form a general partnership in Minnesota, along with describing the pros and cons of this form of business.
Forming a partnership in Minnesota isn’t right for every situation. There are positives and negatives associated with this type of entity. You should understand these and apply them to your situation before making a decision.
Here are the pros of forming a partnership:
The biggest benefit of a Minnesota general partnership is how easily and quickly it can be established.
The ease of creating a partnership might be outweighed by the cons:
If the negative aspects outweigh the positive aspects of this business form, you can always start your company as a limited liability partnership, LLC, or corporation.
Any person or partnership that conducts business in Minnesota under a name that’s different than the name of the partners must register the chosen company name.
A “doing business as” (DBA) or assumed name petition is required if you choose to use a name other than the names of each partner. You can do this by filing a Certificate of Assumed Name with the Office of the Minnesota Secretary of State.
Even though it’s not a formal requirement in Minnesota, it’s strongly suggested that partners draft and sign a Partnership Agreement. The success of any business partnership in Minnesota depends on how well the partners work together to create success for themselves and their company.
Putting the important things in writing makes sure that each partner understands their responsibilities and how the company is going to be run. There are many items that can be addressed in a Partnership Agreement so that future conflicts can be avoided:
A Partnership Agreement is important because, without one, the partners are subject to Minnesota’s Uniform Partnership Act of 1994. These are general rules that don’t take your specific needs into consideration. If you fail to create a Partnership Agreement, you’ll have to abide by these rules when conflicts arise.
A partnership must obtain business licenses, permits, and clearances when necessary. Not all businesses are regulated or require a license to operate in Minnesota. With our Business License Report, you can be assured that you’ve obtained all the necessary licenses, permits, and clearances so that you’re legally compliant.
An Employer Identification Number (EIN) is obtained through the IRS. It’s your company’s identification number for when you’re filing federal taxes with the IRS. We offer an Employer ID Number Service to easily and quickly accomplish this task.
Although the partnership itself isn’t taxed at the business level, it must file an annual federal and state “information” return with the IRS and the Minnesota Department of Revenue. For this reason, both federal and state tax identification numbers need to be obtained.
A general partnership in Minnesota that will be selling a product or service that’s subject to sales tax will also need to register for Minnesota sales and use tax. You can file for a state ID at the Minnesota Department of Revenue.
If you’ve decided that you want to form a Minnesota general partnership, start with the basic steps in this article. If you have any questions, also remember to consult a tax professional for advice.
Even after your company is up and running, we can continue to help throughout the life of your company. With our business development and maintenance services, we can free up your time so you can focus on the important aspects of making your enterprise a success.
Not only do we help with partnerships, but we can also help with the formation and operation of other types of business if that’s what you need. Use our Minnesota LLC formation services and Mississippi corporation formation services if you’ve decided that a partnership isn’t right for your plans.
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.
No. You don’t have to register as a general partnership in Minnesota. But if you choose a name that’s different from the partners’ names, you need to register that DBA name.
No. There is no taxation at the business level. The profits are passed to the individual partners who then pay taxes on the income on their personal tax returns.
With a general partnership, each partner shares in the ownership and running of the company. Conversely, owners have an ownership interest in the company but may not have the right to run the business.
In a Minnesota general partnership, each partner shares the responsibility of making decisions for the company. Each partner also shares equally in the company’s profits and liabilities. Often, partners will create a Partnership Agreement to put all the partners’ rights and responsibilities into writing.
Each partner is responsible for the debts and liabilities of the general partnership.
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