Form a General Partnership in Vermont

A Vermont general partnership is a type of business structure that people can use when they start a new company. A general partnership begins when two or more people agree to create a business where they share in the profits and liabilities of the company, along with the responsibilities of running the business. Technically, you and your partners don’t have to file anything or create any type of written agreement for a general partnership to exist. This is why it’s one of the easiest forms of business structures to use.

Step 1: Determine if you should start a general partnership

Even though it’s really easy to start a partnership, it’s a good idea to review the pros and cons of this type of business structure. It may fit well within your plans, or it may not.

Pros

Here are the positives about forming a partnership:

• No filing requirement with the state
• Able to be quickly formed
• Very little yearly maintenance paperwork
• The work, debts, and profits are equally shared
• The business isn’t taxed separately from the partners

The bottom line is that a Vermont general partnership is easy to create and you get the same tax benefits as an LLC, but with a lot less paperwork.

Cons

The ease of creating a partnership might be outweighed by some of the negative aspects of this form of business.

• Shared liabilities of each partner
• More difficult to obtain expansion financing
• Potential conflicts between the partners
• Potentially responsible for a partner’s actions

Depending upon your plans, some of the more complicated business structures that provide more robust liability protection might be best for your new company.

Step 2: Choose a business name

If you’re seeking to do business in Vermont as a general partnership, you will generally need to operate under the partners’ names. If you want to name your business something else, you’ll have to register your partnership name as an assumed business name with the Secretary of State. These are more commonly referred to as Doing Business As (DBA) name designations. If you already have a name in mind, check to see if your business name is available.

Step 3: File a DBA name (if needed)

Many general partnerships prefer to use a DBA (doing business as) name, also known as an assumed name in Vermont. Such a name may be more memorable for customers or help with marketing efforts. Vermont requires that you register any DBA or assumed name you use for your general partnership with the state.

Step 4: Draft and sign Partnership Agreement

You don’t have to file a partnership agreement with the state. Therefore, it’s not absolutely necessary to draft and sign a partnership agreement. But it’s generally a good idea for your company. It can establish certain rules of how you will run the company and delegate responsibilities amongst the partners. Without an agreement, any conflicts must be resolved through Vermont’s General Partnership statute, Title 11, Section 3212. Some of the things to include in your agreement could be the following:

• How and when to admit new partners
• When or under what circumstances the company will dissolve
• A defined procedure to resolve conflicts between the partners
• Percentages of profits and each partners’ responsibilities toward the company

Although a partnership agreement isn’t necessary under the law, it could save a lot of conflict in the future when issues arise. A partnership is similar to an LLC Operating Agreement, which we can help you prepare if you find that an LLC better meets your business’s needs.

Step 5: Obtain licenses, permits, clearances

One of the most time-consuming tasks for starting a new Vermont general partnership is obtaining all the necessary licenses, permits, and clearances. No matter what type of business you have, you will need some form of these documents from various government agencies. But we can make it easy for you with our Business License Report that identifies your licensing and permitting needs at every level of government.

Step 6: Get an Employer Identification Number (EIN)

An Employer Identification Number (EIN) is an identification number for your business and is necessary to perform certain business tasks. You receive your company’s EIN through the Internal Revenue Service (IRS). With it, you can file taxes, open a bank account, and apply for loans. We offer an Employer ID Number Service to easily and quickly accomplish this task.

Step 7: Get Vermont state tax identification number

Vermont doesn’t require a state ID separate from the EIN you’ve obtained from the IRS. However, you may have to register for a business tax account, especially if you will be paying sales and use taxes.

Forming a Business Partnership in Vermont: Next Steps

Once you’ve completed these steps, you may want to look into opening a business bank account and obtaining any necessary insurance for your business. Although these steps can be accomplished fairly quickly, if you run into any questions, always remember to consult a tax and business professional. You will also want to keep up with your taxes.

How We Can Help

A Vermont general partnership is great for people who want to start small businesses quickly and easily. We can help you get on your way to a successful future with our business development and maintenance services, including our Worry-Free Compliance Service, so you can focus on other important things.

If you need another business structure, we also offer help with forming other types of businesses in Vermont. Use our Vermont LLC Formation Services and Vermont Corporation Formation Services to get started. We can also help you draft your Articles of Organization for a Vermont LLC or Articles of Incorporation for a Vermont corporation.