Form a General Partnership in New Jersey

Starting a business by yourself is scary. But when you take on the challenge with a good partner by your side, it becomes much more manageable. A general partnership in New Jersey allows two or more people to own a business together. Not sure how to form a general partnership in New Jersey? Don’t worry. We’ll go over the steps involved in forming a partnership in New Jersey and who should consider doing so.

Step 1: Determine if you should start a general partnership

Some business owners like partnerships because they are simple. Others prefer other types of businesses, like limited liability companies or corporations. Let’s take a closer look to see if a New Jersey general partnership is right for you.

Pros

Some of the benefits of forming a New Jersey general partnership include:

• Creating a New Jersey general partnership is easy.
• A general partnership requires less paperwork and incurs fewer legal fees than either an LLC or a corporation.
• If you have a general partnership in New Jersey, it is easy to pay your taxes. Your share of the profits from the business will go directly to you and your partners for tax purposes. You don’t need to pay an additional federal corporate income tax.

Cons

There are some possible disadvantages to a New Jersey general partnership. These include:

• A partner is legally responsible for the partnership’s debts and liabilities.
• You could also be held responsible for your partner’s misconduct or other wrongdoing.
• General partnerships may be more limited when it comes to raising capital than corporations.

A general partnership is a good way to start, but if you want to run a business for a long time, a corporation or LLC might be a better fit.

Step 2: Choose a Business Name

A general partnership usually has just the last names of the partners. If you want to create a separate name for your partnership, you may want to consider registering an assumed or “doing business as” (DBA) name. 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)

You can register an assumed name for your New Jersey general partnership through the New Jersey Secretary of State. You will want to avoid choosing a name that is too similar to an existing business or one that might imply illegal activity. If you need help registering your DBA in New Jersey, we can provide you with more information.

Step 4: Draft and sign partnership agreement

A partnership agreement is like a rule book for your partnership. It tells people what they should do and how to act insofar as the partnership is concerned. It helps you avoid problems later on, even if you don’t think there will be any problems now. If you do not have a partnership agreement, then disputes will be subject to the New Jersey Uniform Partnership Act, which may not be the best avenue to take.

Step 5: Obtain licenses, permits, clearances

General partnerships in New Jersey do not need a statewide business license unless they are engaged in certain professional trades. Some of the business licenses in New Jersey include:

• Accountant
• Investment advisor
• Athletic trainer
• Lawyer

It might be worth checking with your county and state government to see whether your business needs any type of license. The state has a site where you can explore all the professions that require licenses, but we can help take that off your plate with our Business License Report.

Step 6: Get an Employer Identification Number (EIN)

An EIN is a number that the federal government gives to businesses. If you plan on opening a bank account, hiring employees, or borrowing money as part of your business, then you will need an EIN from the government. For many businesses, this is necessary. Fortunately, we can help you obtain your EIN.

Step 7: Get New Jersey State Tax Identification Numbers 

Your New Jersey general partnership will need to register with the State of New Jersey. The partnership may be subject to income tax on its New Jersey-derived income. You may also need to pay an additional filing fee if you have more than two partners in your New Jersey general partnership. You can register as a general partnership in New Jersey on the state’s registration portal.

Forming a Business Partnership in New Jersey: Next Steps

After starting your New Jersey general partnership, you may want to think about other things. For example, it is a good idea to set up a bank account for your business. Or maybe buy or lease office space. You can also take out an insurance policy if your business is exposed to risk or liability. You may want to explore financing options if you need leverage for projects. This could mean borrowing money from a bank or other institution to help pay for the costs of your project. You will also want to keep up with your taxes.

How We Can Help 

A general partnership can be a good idea for short-term business endeavors. But there are two other types of entities that may work better for you: an LLC and a corporation. You can talk with us about forming either of these entities and we will help you decide which one would best fit your needs. We also offer a wide range of additional services, including our Worry-Free Compliance Service. Feel free to contact us if you are interested in creating a New Jersey entity or registering an assumed name in New Jersey.

If you want to have more liability protection for your business than what is given by a general partnership, we offer services to help you form a New Jersey LLC or a New Jersey corporation.