Form a General Partnership in Massachusetts

If you prefer to have a co-owner for your new business venture, you have many options for its structure, including a general partnership.

It’s important to review the characteristics of a Massachusetts general partnership before you start one. Below you’ll see how to form a general partnership in Massachusetts and the common advantages and disadvantages of this business structure. 

Step 1: Determine if you should start a general partnership

Whether starting your business as a Massachusetts general partnership is a good idea is dependent on your unique needs. But we can help you start that analysis with a list of common pros and cons. 

Pros

You might want to form your business as a partnership if you’re looking for the following advantages: 

• Easy formation process
• Pass-through taxation
• Low maintenance
• Straightforward division of profits and losses

This business structure is pretty informal and simple, but it’s usually not a practical choice for long-term business projects. If you want your business to survive after you’ve left the venture, you’ll probably need to choose a more formal business structure than a general partnership. 

Cons

You might want to avoid starting a general partnership if any of the following factors are too damaging to your business purposes: 

• Strict rules for transferring ownership
• Joint and several liability among general partners for the partnership’s legal and financial issues
• Liability among all general partners for the wrongful acts individual partners commit in the ordinary course of business
• Limitations on raising business capital, compared to other business structures

If you still want to start a partnership, but you don’t like some of these disadvantages, you can try starting a different kind of company. Another type of partnership you can start in Massachusetts is a limited partnership. You could also start a limited liability partnership.  Often, the best way to determine if a general partnership or other business type is right for you is to speak to legal and financial professionals about your options.

Step 2: Choose a business name

There are generally no Massachusetts general partnership registration requirements for formation. Like other unregistered general partnerships, your company can use all the general partners’ names as the name for the business without doing extra paperwork. If you don’t want to name your business after its general partners, you need to file paperwork with your local government officials. 

Step 3: File a DBA name (if needed)

It’s pretty standard to use your partners’ names as your partnership name; but what if you want something more creative or different? The different name you choose is called a “doing business as” or DBA name. You’ll likely need to register a DBA with the local government where you operate your business. This often requires filing an application with the city and paying a registration fee. You normally have to renew this registration on a regular basis.

Step 4: Draft and sign a partnership agreement

A big way to promote smooth business operations is to write your own rules for conducting business. You can do this with a signed Massachusetts General Partnership Agreement. With a Partnership Agreement, you can customize rules for running your company. Partnership Agreements usually address issues such as: 

• Transferring ownership
• Dividing losses and profits among individual partners
• Deciding when to dissolve the business
• Resolving conflicts between partners 

Without a Partnership Agreement, your general partnership in Massachusetts has to operate according to the default rules in Massachusetts’s Uniform Partnership Act. Staying with the default rules might sound easy at first. However, these generic, one-size-fits-all rules could wreak havoc on your business down the line because they don’t take the unique needs of your company into consideration.

Step 5: Obtain licenses, permits, clearances

Regardless of the business structure you choose, you’ll likely need some type of business license, permit, or clearance to have the authority to conduct business in your area. Your general partnership might need authorization from the federal, commonwealth, and local governments. At the commonwealth level, common licenses that many businesses need include: 

• Professional licenses
• Sales and use tax registrations
• Food processing licenses

You might have far more licensing obligations at the local government level, so it’s important to look at your city, county, and township websites for more information about their requirements. 

There are dozens of licenses, permits, and clearances businesses might need to legally operate. Figuring out what you need can be tricky and time-consuming. But you can leave this deciphering to us. With our partners at Avalara, we can provide you with a Business License Report that lists your licensing obligations at every level of government. 

Step 6: Get an Employer Identification Number (EIN)

If you want your Massachusetts general partnership to avoid legal and financial issues, you need to properly pay your business taxes. Properly paying federal taxes for your general partnership requires having an Employer Identification Number (EIN) from the IRS. Your business’s EIN is how the IRS identifies it for federal tax filing purposes.

This is yet another crucial task that overburdened business owners need to complete. You can lighten your load by allowing us to obtain your business’s EIN for you through our Employer ID Number Service. 

Step 7: Get Massachusetts commonwealth tax identification numbers

Your business also needs to pay taxes at the commonwealth level. The taxes you need to pay to the commonwealth depends on your business activities. If you want to pay your taxes online, you need to register your business with the Department of Revenue’s MassTaxConnect service. 

Forming a Business Partnership in Massachusetts: Next Steps

Once you’ve submitted the proper paperwork to start conducting business, you want to make sure your finances are in order. It’s an important next step to start a business bank account and obtain insurance as soon as you can. You can use your EIN to open your business’s accounts and policies. 

How We Can Help

It’s no surprise that running your own business is a lot of work. But this work doesn’t have to be overwhelming. To help make sure your business stays legally compliant from start to finish, you can use our Worry-Free Compliance Service. You can also use our extensive series of business development and maintenance services to help keep your business operations smooth and easy.

If you have your sights set on starting a business structure different from a general partnership, we can help with that too. Whether you want to start a limited liability company (LLC), or a corporation, we can help you get going quickly with our Massachusetts LLC and Massachusetts Corporation Formation Services. 

Disclaimer: The content on this page is for information purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.