Form a General Partnership in Louisiana

This step-by-step guide will explain how to form a general partnership in Louisiana and the benefits and possible drawbacks. 

Step 1: Determine if you should start a general partnership

The general partnership offers many benefits for new small business owners. However, the partnership structure is limited by its simplicity. This section will review the common pros and cons of the general partnership business structure. If you want to compare the partnership to the other business structures, decide which structure is right for you.

Pros

The pros of starting your business general partnership include:

• The formation process is simple
• It’s low maintenance and flexible
• The distribution of profits and losses is straightforward
• No entity-level taxation (the partnership uses pass-through taxation)

One important benefit of a business partnership in Louisiana is that you can set the length of the business venture ahead of time. This makes it great for a short-term venture. You might consider another structure if you want to run the business long-term and leave a legacy by passing the company down to your heirs.

Cons

If your business goals are loftier than a single business venture, the partnership might have drawbacks, such as:

• Fewer options for raising capital
• Potentially limited transfer of your ownership share
• In Louisiana, a partner in a general partnership has unlimited liability for his virile share of partnership debts. 

While we can explain the general pros and cons of the partnership structure, only a registered professional can review your circumstances and recommend the best structure to meet your specific goals. Before choosing a business structure, you may want to consult with your attorney or legal advisor.

Step 2: Choose a business name

Once you’ve selected a business structure, the next step to forming a partnership in Louisiana is choosing a name. If you choose not to register your general partnership, you should use the partners’ names in your business name. For example, if your name is Steve Smith and your co-owner is Sarah Bethel, your business name could be “Business by Smith and Bethel.” If the partners want to use a different name, you can register your DBA name for your exclusive use.

Step 3: File a DBA name (if needed)

If you adopt a name for your general partnership that doesn’t contain the partners’ names, it may be a “doing business as,” “DBA,” or “assumed” name. You can register your DBA name with the county clerk so others can identify your business. If you want to use a unique, protected trade name, you can register it with the Secretary of State to prevent other businesses in the state from using that name. If you’re still considering options, you may file to reserve your trade name with the Secretary of State for 120 days.

Step 4: Draft and sign Partnership Agreement

Your Louisiana General Partnership Agreement sets rules for how your business will operate. You can choose to vary the partners’ participation in profits, commercial benefits, losses, or the distribution of assets. You can also specify the situations that trigger business dissolution or the times a partner may dissociate (leave the partnership). If you don’t create a Partnership Agreement, you’ll have to resolve your disputes based on the default rules found in the Louisiana Civil Code, Title XI—Partnership.

Step 5: Obtain licenses, permits, clearances

While there’s no formal Louisiana general partnership registration to form a new business, you may need to obtain licenses, permits, and clearances before legally operating. You’ll need to search for your business’s needs at the federal, state, and local level (parish, county).

Standard licenses and permits include a certificate of occupancy, occupational licenses for professionals and other regulated industries, food permits, or beverage or tobacco permits. The Lousiana Secretary of State online portal “geauxBIZ” offers a new business checklist to help you find the licenses you need.

If even this sounds like more work than you’re up for, we offer a comprehensive Business License Report that lists all your licensing and permitting needs at every level of government. 

Step 6: Get an Employer Identification Number (EIN)

Every general partnership in Louisiana needs an Employer Identification Number from the IRS. You’ll need an EIN to report wage withholding and federal taxes. You can apply online with the IRS, or we can complete the application for you with our Employer ID Number Service. 

Step 7: Get Louisiana state tax identification numbers 

To obtain a state identification number, visit the Louisiana Secretary of State’s online portal “geauxBIZ.” Not only will you register with the Secretary of State, but you’ll register with the Louisiana Department of Revenue and Louisiana Workforce Commission at the same time. Your state identification number identifies you when you pay sales taxes, excise taxes (on certain goods), and state wage withholding. You’ll also use it if your partnership files a composite return for any nonresident owners.

Forming a Business Partnership in Louisiana: Next Steps

Once you’ve obtained your EIN and other permits, consider opening a business bank account. Opening a new account exclusively for your partnership allows you to keep the business income separate from your personal finances. Consider what level of insurance your business needs and shop for a provider. Finally, don’t forget to consult your legal and financial advisors to ensure your finances are on track for opening. You will also want to keep up with your taxes.

How We Can Help

While starting a new business can be daunting, we’ve done it thousands of times. Sign up for any of our specially-curated business products and services, and you’ll gain access to our team of business experts. When you use our Worry-Free Compliance Service, we’ll remind you of important deadlines and keep your essential documents on your business dashboard. We’ll be here for you through the life of your business. 

If you’ve decided on a different business structure, like a Louisiana corporation or limited liability company, we offer Formation Services to help you get started.