College Station business attorney explains how to form a Texas partnership
If you are in business with one or more persons, you may have already formed a partnership even though you have no written agreement or other paperwork. Whether a partnership is the most advantageous structure for your business is a question to be answered in consultation with your College Station business attorney. A partnership, like other business organizations, has advantages and disadvantages.
A Texas general partnership is an association of two or more persons who agree to carry on a business for profit. Each of the partners has equal say in the partnership's management, unless they agree otherwise. Each of the partners in a general partnership has unlimited liability for partnership debts, obligations, and liabilities.
No paperwork needs to be filed with the state, nor is any written document required to create a general partnership. However, the partners should have a written partnership agreement. A partnership agreement is necessary to spell out how the partners will manage the business, how profits and losses will be allocated among them, what capital and services each partner will contribute, and how each will be compensated. A partnership agreement is a complex document that should be prepared by an experienced business attorney.
A limited partnership has at least one general partner and one limited partner. The general partners manage the business and have unlimited liability for partnership obligations and liabilities, just like the partners in a general partnership. Limited partners have no say in most management issues and their liability is limited to the amount of their investment (their capital contribution) plus certain distributions by the partnership to them.
A limited partnership, like a general partnership, should operate under the terms of a partnership agreement prepared by a professional.
Forming a Texas limited partnerships
Texas requires that limited partnerships file a Certificate of Formation with the Secretary of State and pay a filing fee. The Certificate must provide the following information:
- Name of the partnership.
- Type of entity (i.e., a limited partnership).
- Registered agent for service.
- Names of each general partner.
- Address of principal office.
- Effective date of filing.
- Signatures by each general partner.
Other tasks involved in starting a business
Registration of assumed business name. If you will be operating your partnership under a name that that does not include the surname of all of the partners, you will need to register the name as an “assumed business name” with the county clerk in the county where the partnership business is located.
Licenses, employment, and insurance issues. Your business may need to obtain licenses and permits from the local government authorities where you are located. You will need to get an employer identification number from the Internal Revenue Service and register with the Texas Workforce Commission. Workers' compensation insurance should be considered, as well as liability coverage.
If you need guidance in choosing a structure for your business or help with preparing agreements and other paperwork, contact the College Station business lawyers at the Peterson Law Group. We can help you decide whether a general or limited partnership is an appropriate choice for your business and can draft your partnership agreement, and make sure that your business is in compliance with all legal requirements. Contact us now at 979-703-7014 or through our online contact form.