Partnerships consist of two or more individuals that agree to form a business. Unlike a limited liability company or a corporation, partnerships do not have to file documents with the state to begin the company’s existence. All partnerships should have a written partnership agreement that details the rights and responsibilities of each partner. Partners of the business have unlimited liability for company debts and obligations. This means a company creditor may pursue a partner’s home, automobile and other personal assets as compensation for business liabilities.
Present the company’s written partnership agreement. Providing a partnership agreement proves the existence of a partnership business. The partnership agreement may contain the financial contribution of each partner, the managerial expectations imposed on partners, the purpose for starting the business and the date when the company will end. A partnership agreement should be on hand at the company’s primary office location.
Locate the partnership’s Schedule K-1, also known as Form 1065. Every partnership must file a Schedule K-1, for each partner, with the Internal Revenue Service. Schedule K-1 details each partner’s share of profits, losses and liabilities. Partnerships exist as pass-through entities, meaning the partnership does not pay taxes as a business. Partners of the business can pass their share of profits and losses directly to their personal income tax return. Partners use Schedule K-1 to complete their personal income tax return.
Show the partnership’s fictitious name registration certificate. Partnerships that use a name other than the last name of each partner, must file a fictitious business name with the city or county where the company operates. The cost to file a fictitious business name varies from county to county. The fictitious business name certificate indicates the fictitious name of the partnership and the date when the name came into existence.
Display the partnership’s certificate of partnership authority. Filing a certificate of partnership authority is not a requirement, but exists as an option when forming a partnership in states such as California. The certificate contains information like the name and address of the business, and the name and address of the company’s partners. The cost to file a certificate of partnership authority varies based on the county and state where the company operates.
- Reference For Business: Partnership
- SBA.gov: Partnership
- Nolo: Partnership Basics
- IRS.gov: Schedule K-1
- Internal Revenue Service (IRS). "Partnerships." Accessed May 29, 2020.
- Uniform Law Commission. "The Uniform Limited Partnership Act (ULPA) (2001) (Last Amended 2013): A Summary." Accessed May 29, 2020.
- Internal Revenue Service (IRS). "Limited Liability Company (LLC)." Accessed May 29, 2020.
- Internal Revenue Service (IRS). "LLC Filing as a Corporation or Partnership." Accessed May 29, 2020.
Christopher Carter loves writing business, health and sports articles. He enjoys finding ways to communicate important information in a meaningful way to others. Carter earned his Bachelor of Science in accounting from Eastern Illinois University.