The Essentials of a Business Partnership
A partnership is a type of business entity that is comprised of two or more persons. Under the laws of various states and Florida, a person is defined as an individual, groups of individuals, companies, and corporations. As a result, the complexity of the partnership depends on the entities it comprises. Each partner in the partnership shares in the organization’s profits, losses and shares of the business operation. Given the sharing of profits and losses, the partners are jointly and severally liable for the debts of the partnership.
Partnerships as Business Entities
There are three forms of partnerships available: (1) general partnerships, (2) limited partnerships, and (3) limited liability partnerships. General partnerships comprise of partners who are active in the daily operations and are liable as owners for the debts and liabilities of the partnership. Limited partners are comprised of one general partner who manages daily business activities and is liable to the business with a limited partner that does not participate in the business and does not incur any liability. Limited liability partnerships have a similar structure to limited partnerships, but are permitted more general partners. Partnerships are not taxable entities as the income from the partnership is taxed proportionally to the partners who share in the profits.
Forming a Partnership in Florida
Forming a partnership business entity in Florida is fairly simple. The business partners must come together to select the name of the business. The naming of a business is not a trivial matter. In the alternative, business owners must ensure that their business name is not already taken; they must ensure that it fits their business model; and that it is not illegal. After choosing the name, the partners must file a trade name application with the Florida Division of Corporations. After the approval of the trade name application, the partners must draft and sign a partnership agreement. Involving an experienced attorney in this stage is important. Partnerships are usually in existence for a term or duration of time. Should one partner decide to leave the partnership before the end of the term, the person must understand his or her legal obligations and the legal ramifications that can follow. After signing the partnership agreement, the business must obtain all relevant licenses, permits and zoning clearances. The last step to gaining recognition as a partnership is to receive an employer identification number. This number will track the finances of the operation for the purposes of tax reporting.
Dissolving a Partnership in Florida
There are two main ways for dissolving a partnership in Florida. The first way is by agreement. Here, the partners will sign an agreement that pronounces the dissolution of the partnership. In this instance, all partners and entities that make up the partnership will take a vote or reach a unanimous consensus. All such actions to dissolve the partnership must be in line with the terms in the initial partnership agreement. In Florida, a partnership can file a form with the Division of Corporations to have the state formally recognize the ending of the business entity. The form is called a Statement of Dissolution and it makes a public declaration that the partnership has ended. Although not required, it is helpful for others who have an interest in the entity including tax agencies and creditors.
Fort Lauderdale Business Law Attorney
Fort Lauderdale business lawyer Brendan A. Sweeney has years of experience advising and assisting individuals with their business formation needs. Entity formation is the most important aspect of starting a business. Attorney Sweeney provides individualized advice to suit your business needs. Contact us now for a consultation.