Discover the basics of a Virginia general partnership, where individuals work together to manage and share profits. Explore our guide below for essential strategies and insights, crucial for entrepreneurs navigating the diverse business scene of the Old Dominion State.
Forming a partnership in Virginia is a great way to get your business started quickly. All you really need is a handshake to start doing business together. Despite the simplicity, there are some things you should know about forming a Virginia general partnership.
This article will review how to form a general partnership in Virginia, the pros and cons of doing so, additional requirements, and potential pain points.
Forming a Virginia general partnership isn’t the only way for people to co-own a business. It’s important to understand the pros and cons, so you can determine what is right for your company. If you decide that a Virginia limited liability company or Virginia corporation is the correct business structure for you, we can help you get started with our Business Formation Services.
Forming a general partnership in Virginia is easy. Choose to start a company with a person or people you trust, and then begin conducting business. There are no administrative formalities or ongoing maintenance fees. Short-term ventures are ideal for partnerships because they take such little effort to create or dissolve. Virginia general partnerships are also subject to pass-through taxation, meaning that taxes pass through to the personal tax return of the individual partners.
The easy formation process is great but sometimes simple isn’t best. A general partnership in Virginia doesn’t provide any personal liability protection. Unlike many other legal entities, debts, legal obligations, and other financial concerns are the personal responsibility of you and your partners. The lack of formalities may also make it harder to raise capital if you decide to grow the business.
General partnerships in Virginia must include the last names of all partners. This can make it difficult to market your business. To use a different business name, you must register a DBA (doing business as) name. In Virginia, this is called an assumed name or fictitious name.
In Virginia, you register your DBA with the State Corporation Commission, either online or using a PDF form. Make sure to choose the form specifically meant for a general partnership. The name you choose needs to adhere to all Virginia general partnership naming regulations, and you will need to pay a filing fee.
A Virginia general partnership agreement is a contract between partners, defining the rights and responsibilities of each person. Virginia allows but doesn’t require general partnerships to file a Statement of Partnership Authority with the State Corporation Commission. The document can be used to establish a public record of the existence of the partnership. If no agreement is created, disputes will be handled according to Chapter 2.2 of the Virginia Uniform Partnership Act.
To make things even easier, Virginia doesn’t have a statewide business license requirement. That doesn’t mean you’re completely off the hook. Depending on your location and industry, your business may require licenses, permits, or clearances at the local, state, or federal level. Determining what you need requires some research, which can be time-consuming. We can help with our Business License Report Service, which determines what you need according to what you do and where you are.
An Employer Identification Number (EIN) is necessary for your Virginia general partnership to hire employees, pay any business taxes, and open business accounts. Your EIN is issued by the IRS. Check one more thing off your list by choosing to have us take care of that for you with our Employer ID Number Service.
If you own a business in Virginia, you generally need to register your business with Virginia Tax so that you can pay any sales or excise taxes that apply to your business. If you hire employees or have plans to, you can register with the Virginia Employment Commission (VEC) at the same time by registering online. Unemployment taxes are collected by the VEC. If you register online, you will immediately receive your Virginia state tax identification number.
Compared to other business entities, it doesn’t take much to get your Virginia general partnership started. Once you have a name that fits, a partnership agreement, and all necessary licenses and tax numbers, you’re ready to start running your general partnership in Virginia. Be sure to open banking accounts under the official business name to keep all business finances and personal assets separate. Keep in mind that you may also need business insurance.
As your Virginia general partnership continues to grow, we are here to make sure you have all the tools to expand and stay organized, whether that means forming a different business entity with more liability protection, obtaining additional funding, opening new locations, or whatever else the future may bring.
Just because forming a partnership in Virginia is simple, doesn’t mean it’s right for you. Like any other business, it’s important that you stay on top of all state and local requirements to keep your business operating without any hiccups. Our extensive suite of business development and maintenance services, including our Worry-Free Compliance Service, can help you easily fulfill many of your business obligations with less stress.
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 Virginia. Partners can basically just start doing business together. You will need to register for a DBA (if needed), obtain federal and state tax ID numbers, 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 return of individual partners. Virginia general partnerships do have to pay state sales tax and other applicable taxes.
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 a Virginia general partnership just by starting to do business with another person. If there is no partnership agreement, Virginia state rules will apply. Partnership agreements are recommended.
In a general partnership, creditors can hold any partner responsible for all the debts of the partnership.
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