If you want to form a partnership or restructure your current business, contact Arenson Law Group, PC immediately. Our partnership lawyers can assist you with every aspect of the process, from formation to dispute resolution.
Multiple types of legal structures are available when starting a business. Your selected structure will determine liability for debts, taxes, and other issues. With a partnership, you go into business with one or more people. You can choose from four types, each with its own benefits.
At Arenson Law Group, PC, we help our clients set up partnerships with the appropriate paperwork and represent them in multiple areas of corporate law. You can count on us to keep your interests in mind and provide valuable advice on whether you need guidance in picking a suitable type of partnership or creating operating agreements.
Call Arenson Law Group, PC at (319) 363-8199 today for a confidential consultation with an experienced Cedar Rapids corporate law attorney to learn more.
Why Hire Arenson Law Group, PC?
At Arenson Law Group, PC, we have extensive experience representing business owners and protecting their rights. When you want to start a partnership, you must follow multiple steps and observe the appropriate state laws. We will explain each requirement you must meet to form your partnership and run it effectively.
Our partnership lawyers can help create a partnership agreement, so you and your partners are on the same page and understand everyone’s rights, duties, and liabilities. You will receive ongoing support to achieve continued success after forming your business.
Types of Partnerships in Iowa
You can choose from four types of partnerships as the legal structure for your business. Considering the advantages and disadvantages of each is crucial to making an informed decision. The four types of partnerships include:
- General Partnership – A general partnership (GP) is the simplest structure when starting a business with one or more partners. Two or more people enter a formal agreement to operate a business together. Each partner is personally liable for the company’s debts. They also share business profits and assets.
- Limited Partnership – A limited partnership (LP) is like a general partnership. However, there are two levels of partners. A limited partner is liable only for the money they invested into the business. A general partner is fully liable for business debts. Both manage the day-to-day operations.
- Limited Liability Partnership – With a limited liability partnership (LLP), each partner isn’t liable for another’s errors or fraud. This kind of partnership benefits business owners who intend to take on significant risks.
- Limited Liability Limited Partnership – A limited liability limited partnership (LLLP) blends an LLP and LP. The business has limited and general partners. However, the structure protects each partner from the other’s legal obligations, errors, and debts.
Forming a Partnership in Iowa
Before proceeding with the formation process, you must choose the type of partnership you want. Each step is similar except the one involving paperwork. You must complete different forms depending on the type of partnership you select.
Pick and Register the Name of Your Business
Your business name must include the type of partnership you decide on, whether LP, LLP, or LLLP. The name must also be unique. By searching the state business database, you can confirm that no other company uses your chosen name. Once you determine the name is available, register it with the government.
Complete Required Forms
To be a legitimate business, you must file paperwork and pay the filing fees. The required paperwork depends on which type of partnership you want to form:
- GP – A general partnership requires filing a Fictitious Name Resolution if you’re not using your own names for the business name. You should consider establishing a partnership agreement to describe how you’ll operate the company, each partner’s responsibilities, and other essential aspects of the business.
- LP – A limited partnership requires filing a Certificate of Limited Partnership.
- LLP – You must complete and file a Statement of Qualification of an LLP with the state to form a limited liability partnership.
- LLLP – You form a limited liability limited partnership as an LP and elect your business to be structured as an LLLP on a Certificate of Limited Partnership form.
Obtain an EIN
You should determine whether you need an employer identification number (EIN) from the Internal Revenue Service (IRS). You can use it to file taxes, pay employees, and open business bank accounts.
Confirming whether your business needs additional licenses from the state to operate is also necessary. You might need a business license or permit depending on where your company operates and the type of industry it’s in. However, a GP doesn’t require a general state-level business license.
Establish Operational Procedures
After completing the legal aspects of forming your partnership, you and your partners should decide on basic business affairs, such as:
- Physical address – You should pick a physical address for your company. It should be where you want to receive mail and legal documents.
- Partnership agreement – A written agreement between you and your partner or partners is crucial despite your relationship with them. Although you might trust them, an agreement legally binds everyone to the business. It can ensure every partner understands and fulfills their duties and obligations.
- Open a bank account – You’ll need a business account to keep business finances separate from personal finances. Typically, banks require various documents to open a bank account for a partnership, such as a state-issued ID for each partner, an EIN confirmation letter, a signed partnership agreement, and, depending on the circumstances, a DBA stamped and approved by the Secretary of State.
- Maintain records – Although state law doesn’t require partnerships to keep certain business records, you should maintain a copy of your partnership agreement, financial statements, and tax reports. Store these somewhere safe so you can refer to them if necessary.
Speak to a Knowledgeable Cedar Rapids Partnership Lawyer Today
Arenson Law Group, PC understands your challenges when forming a partnership in Iowa. We can advise you on the advantages and disadvantages, the formation process, and other essential parts of operating a business as a partnership. You will receive legal guidance and representation during every step.
Call us at (319) 363-8199 for a confidential consultation with a partnership lawyer today if you want to structure your business as a partnership.