People can create a partnership whenever two or more people agree to do business together, and there is no formal paperwork required to establish the partnership when people agree to do business with one another. It is still recommended that you hire Austin business partnership attorneys for assistance in ensuring your partnership enjoys full legal protections.
You also need to consider which kind of partnership you are forming because the general partnership that is the most common type of partnership means the partners will be personally liable for all partnership debts. Limited partnerships (LPs), limited liability partnerships (LLPs), and limited liability limited partnerships (LLLPs) can all offer liability protections.
Steps to Starting a Partnership
Most partnerships begin with a choice of business name. Many partnerships use the surnames of their individual partners, but they can also use fictitious business names.
Any business name needs to be distinguishable from the name of another company already on record. You can check the availability of a business name by visiting the Texas Comptroller of Public Accounts and the United States Patent & Trademark Office websites.
Register Your Business Name
You will file the name of your business with the Texas Secretary of State and the County Clerk’s Office in the county where your business will be located. An Assumed Name Certificate is the form to register a business name in Texas, and the filing fee will generally be between $10 to $15, depending on the county.
Draft and Sign a Partnership Agreement
Partnership agreements are not necessarily legal requirements for establishing partnerships in Texas but remain a key step to ensuring there will be no misunderstandings between partners. A partnership agreement can help partners know how to manage certain situations.
Some of the items you should cover in a partnership agreement will include the following:
- Every partner’s contribution to the partnership
- How profits, losses, and draws will be allocated
- Each partner’s authority and management duties
- How voting rules will work for decision-making
- How new partners will be admitted
- Plans for bankruptcy, withdrawal, or death of a partner
- How disputes will be resolved
Partners may end up in a legal battle without a written partnership agreement. A partnership agreement can always be amended later when circumstances or conditions change.
Obtain Licenses, Permits, and Zoning Clearance
A business could need to obtain certain business or professional licenses depending on the type of business activity it is engaged in. The Texas Commission on Environmental Quality (TCEQ) has a website that allows you to see permits and licenses that may be required.
Obtain an Employer Identification Number
The Internal Revenue Service (IRS) will assign a business a nine-digit Employer Identification Numbers (EINs) for tax purposes, and partnerships need EINs even when they have no employees. You can obtain an EIN either by mail or online.
Other Steps to Consider
Before you open for your first day of business, also look into opening a business bank account, obtaining general liability insurance, and knowing how you will report and pay taxes. Keep your partnership agreement on hand.
Call Us Today to Speak with Our Austin Business Partnership Attorneys
Are you trying to create a partnership in Texas? You should seek the help of experienced Austin business partnership lawyers so you can be sure that you have all of your legal obligations in order.
Structure Law Group, LLP understands how challenging it can be for individuals to start a small business and works closely with clients to help them take all the required steps to successfully open and operate new businesses. You can call (512) 881-7500 or contact us online to set up a consultation with our Austin business attorneys.