Form a General Partnership in Connecticut

When two or more people agree to run a business for profit as co-owners, they form a Connecticut general partnership. The owners of a general partnership in Connecticut are called “partners” and share equal responsibility for the business.

While forming a partnership in Connecticut is simple, and your tax responsibilities are straightforward, it might not be the best fit for your business goals. This page will explain everything you’ll need to know about how to form a general partnership in Connecticut.

Step 1: Determine if you should start a general partnership

Starting a business as a partnership in Connecticut is easy, but it isn’t a good fit for every project. We’ll share some of the main benefits and drawbacks of creating a partnership to help you determine if it will meet your needs.

Pros

A partnership has several benefits for its owners, including:

• It’s simple to get started
• It requires little upkeep
• In most cases, the allocation of losses and profits is easy
• Most partnerships use pass-through taxes

The partnership structure is most suitable for short-term commercial ventures. On the other hand, it might not be a good fit for running a business in the long term and leaving a legacy. Partnerships frequently end when one of the partners dissociates or dies.

Cons

Depending on your needs, you may encounter problems with the partnership structure, including:

• Partners share equal responsibility (joint and several liability) for all legal and financial concerns that arise in the partnership (debts, negligence, malpractice, etc.)
• Stricter procedures to transfer your ownership share
• When compared to corporations, partnerships have fewer choices for obtaining funds

Before you decide to start a partnership, it’s a good idea to consult with legal and financial advisors. This is true whether you’re sure you want to manage a partnership or are not persuaded it’s the best option. Only a professional with access to your circumstances can recommend the best form for your new business.

Step 2: Choose a Business Name

When you’ve decided on a business structure, the next step is to choose a business name. Your business name represents your business goodwill, and you’ll use it on your tax documents.

There’s no formal Connecticut general partnership registration process. The unregistered partnership usually uses a name with the founding partners’ last names. For example, if your last name is Baker and your partner’s name is Smith, you could name your partnership “Baker and Smith.” If you want to use a different name, you’ll need to register a “doing business as” or DBA name.

Step 3: File a DBA Name (if needed)

If a partner wants to use a name that doesn’t use the partners’ last names, you should register that name as your trade name. Trade names are sometimes called “doing business as,” “DBA,” or “assumed” names. Registration allows others to search for your business and identify its owners. To register a trade name in Connecticut, you’ll file a statement with the town clerk in the place where you do business (not the Secretary of State). You can search the Connecticut Town Clerks Association for a list of local town clerks.

Step 4: Draft and sign partnership agreement

A partnership agreement defines how the partners will make operational business decisions. If you don’t have a written partnership agreement, the default rules in the Connecticut Uniform Partnership Act will govern.

If you write your partnership agreement, you can specify which activities are acceptable within the partners’ duty of loyalty, situations that trigger business dissolution, and the standard for measuring the partners’ duty of good faith and fair dealing. You may also expand the situations when a partner can dissociate or when a court may expel a partner. As with corporate bylaws, a court will look at your Connecticut general partnership agreement to resolve conflicts between owners.

Step 5: Obtain licenses, permits, clearances

While it’s not necessary to register as a general partnership in Connecticut, your partnership needs to meet the same licensing requirements as other businesses. Connecticut offers an online application for industry-specific licensing through its Business One Stop. Common licenses for a partnership might include:

• Sales and Use Tax
• Corporate Business Tax
• Employee Withholding Tax

You’ll also want to check with your town or county to see if you need to obtain local licenses. If verifying all the licenses you’ll need seems overwhelming, we can help with our Business Licenses Report. We’ll check for licenses at all levels of government and help ensure you have what you need based on the nature and characteristics of your business.

Step 6: Get an Employer Identification Number (EIN)

A general partnership needs to apply for an EIN from the IRS. You’ll use your EIN to report wage withholding and when you file business tax returns. Obtaining an EIN can be more paperwork, but we can help you get it done with our Employer ID Number Service.  

Step 7: Get Connecticut State Tax Identification Numbers

 Once your partnership applies for a federal EIN from the IRS, be sure to register as a partnership with the Department of Revenue Services for Connecticut tax purposes. While Connecticut doesn’t tax partnerships at the entity level (income and deductions are passed through to the partners), partnerships may need to make composite income tax payments for nonresident partners. All partnerships with income allocated to Connecticut will file Form CT-1065/CT-1120SI: Connecticut Composite Income Tax Return. 

Forming a Business Partnership in Connecticut: Next Steps

Once you have your EIN and tax registration, you can open a business bank account to separate the business income from your personal finances. Next, consider what types of insurance coverage you need (premises liability, inventory, commercial vehicle, etc.). Finally, don’t forget to consult your legal and financial advisor, so all your finances are situated before you start operating the business.

How We Can Help

In most cases, forming a Connecticut general partnership is a simple process without formal registration. However, to keep your general partnership legally compliant, you’ll most likely need to meet many licensing and tax registration criteria.

At this point, starting a partnership might seem tricky and time-consuming, but it doesn’t have to be. We offer an extensive suite of specially curated business development and maintenance services to keep you on track.

If you’re interested in forming an entity with more robust liability protection, we can help with our Connecticut LLC and Connecticut Corporation Formation Services. Try our Worry-Free Compliance Service, and we’ll help you quickly fulfill many of your business obligations by keeping your important documents in one place and reminding you of upcoming deadlines. We’ve helped many entrepreneurs start new small businesses. We can help with your general partnership.

If you have questions about the other business structures, you can learn the pros and cons of the various business entities.