If you are entering into a partnership with fellow professionals, youll need to get everything in order from federal registration applications to local zoning permits. Most of these tasks will need to be complete before you officially open for business to ensure you cover legal liabilities and have an appropriate internal structure to deal with your operational demands. Here are eight things you need to get started on before your grand opening.
1. Decide on the Type of Partnership
There are two main types of partnerships: general and limited liability. Which one you choose depends mostly on the intended involvement of the partners. In a general partnership, everything, from profits to liability, is evenly split and all partners contribute equally to the business. In a limited liability partnership, partners may have varying involvement in business operations and contributions, so partners share in the business is based on their percentage of involvement.
2. Draft and Sign a Partnership Agreement
A partnership agreement will outline your role and the role of other partners in the business. Without a partnership agreement, your company will be governed via the partnership laws in your state. These default rules may not take into account the full nuance of your organization, so a partnership agreement serves to better protect the rights of everyone involved.
3. Register Your Partnership
You will need to register your partnership with your local Secretary of State office. Typically, when you register, you will solidify the legal name of your business. By default, this is usually the last names of the partners unless you choose something different. This does not have to be the name you are doing business as. You can create a doing business as name for your company later. If you arent sure about registering your partnership, consult with state regulations and your legal team.
4. Select a DBA Name
Your business name should be uniquely connected to your company and industry. Keep in mind, choosing a business name requires more than just picking what you like best. Youll have to make sure the name is unique, so you might want to have a list of possible options. Youll want to check the availability of those names. If an existing enterprise already has the trademark rights to the name or a name similar enough to cause confusion, youll probably want to choose a new name.
5. Register Your DBA Name
When you are doing business under a name that is different than what is given on your registration documents, you will need to register it as a fictitious business or DBA name. This is required in most states. Some local governments may also require you to register your business name.
6. Obtain a State Business License
You need to check your states requirements for business licensing. State requirements vary across borders, but generally youll need a business license, sales tax license application, any related occupational license, any related license for controlled products, and unemployment insurance. Controlled products might include alcohol and firearms.
7. Obtain a Local Business License
Youll also need to obtain local business licenses related to your products and services. Youll need a zoning permit, which demonstrates where you are allowed to conduct business or operate in the area. If you intend to sell or make food as part of your services, youll need a health license, and building permits are also required for those intending to build or remodel. Depending on your location, you may also be required to acquire a series of environmental permits. For example, local air quality boards are increasingly common and dedicated to improving the level of air pollution in the area.
8. Obtain a Federal Business License
If you are conducting any business that is regulated at the federal level, such as selling firearms or alcohol, then you will also need to obtain federal licenses. Youll need an employer identification number, any permits or licenses related to your business services, and a business name. You should consider having your trademark application submitted at this stage. With this checklist in mind, have a meeting with your partners and discuss your plan of action. Dont forget to consult with an attorney before submitting your paperwork!