How to Create a General Partnership in Idaho | A Complete Guide

Steve Bennett
Business Formation Expert  |   Fact Checked by Editorial Team
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Create a General Partnership in Idaho

If you would like to create a general partnership in Idaho, there are a few guidelines that you should understand. A general partnership is one of the things that a businessman considers since it comprises two or more entities to carry on a trade or business. Each partner contributes money, property, labor, or special skills, and each partner shares in the profits and losses from the business. You can start an LLC in Idaho for your general partnership to personally carry potentially unlimited liability.

Knowing about the general partnerships will benefit you and several partners, making you form your business properly. If you want to know more about the general partnership, follow our steps to Create a General Partnership in Idaho.

Webinarcare Editorial Team will help you create with thorough research and market study. Before starting a general partnership in Idaho, you must be guided by all the factors we have gathered in this article.

What is General Partnership in Idaho?

A general partnership in Idaho is a business structure where two or more individuals come together to establish a business and agree to share the profits, losses, and management responsibilities. Each partner contributes skills, resources, and capital to the business and makes decisions collaboratively. In a general partnership, partners have unlimited personal liability for the debts and obligations of the business, meaning their personal assets can be used to cover any debts or liabilities incurred by the partnership. This type of business structure is relatively simple to form and offers flexibility in decision-making and management but lacks the legal protection of limited liability offered by other structures like Idaho Corporations or limited liability partnerships.

It is recommended that you consult to Idaho Business Attorney before beginning the process of forming your general partnership. They will understand what is best for you and your company. To shield your personal assets from corporate debts, you can always Start an LLC in Idaho rather than a general partnership.

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Example of a General Partnership

An example of a general partnership could be a small marketing agency created by two friends, Shane and Jane. Shane has a background in graphic design, while Jane has experience in digital marketing strategies. They decide to join forces and create a marketing agency that offers clients a combination of their expertise.

Shane and Jane contribute their skills, resources, and capital to start the business. They agree to share the profits, losses, and management responsibilities. Both partners actively participate in the agency’s day-to-day operations, making decisions and working with clients collaboratively.

In this general partnership, Shane and Jane have unlimited personal liability for any debts or obligations incurred by their marketing agency. If the agency faced financial difficulties, both partners’ personal assets could be used to cover the debts. However, the simplicity and flexibility of the general partnership structure allow them to manage and grow their business together easily.

Individuals looking to collaborate and numerous service providers have chosen general partnerships as their preferred business entity. That’s frequently because of its simple design, low price, and simplicity of setup. Some general partnership examples include: 

  • Providing Professional Services (architectural firms, medical clinics, etc.)
  • Selling goods at retail 
  • Opening a restaurant
  • Idaho Business Consulting

General partnerships are also formed by partners who are spouses or other family members who want to operate a business together.

Steps in Creating a General Partnership in Idaho

To create a general partnership in Idaho, you must follow the guidelines below: choosing a business name, making a partnership agreement, requesting an EIN, getting a license and permit, and opening a bank account. 

Step 1: Choose a Business Name

Naming your business is one of the most important activities during the startup phase, especially if you will form an LLC in Idaho. Your general partnership name serves as the foundation for your brand and is what clients use to connect you to the products or services you offer. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity without being hampered by irrelevant factors. 

For example, let’s assume the general partnership focuses on providing eco-friendly landscaping solutions. A potential name for this partnership could be “GreenScape Innovations.” This name highlights the business’s core values (eco-friendly) while also showcasing the industry (landscaping) and the innovative approach the partners aim to bring to the market.

For your to come up with this business name idea, here are some guidelines to consider when choosing a name for a general partnership:

  • Reflect on the Nature of the Business: Choose a name representing your products or services, and communicate your business’s essence to your target audience.
  • Keep it Simple and Memorable: A short, easy-to-pronounce name will be easier for customers to remember and share with others.
  • Make it Unique: Research the names of other businesses in your industry to ensure your chosen name stands out and does not infringe on any existing trademarks or copyrights.
  • Consider the Partners’ Names: Some general partnerships incorporate the partners’ names in the business name (e.g., Smith & Johnson Consulting). However, this approach may only be suitable for some businesses, especially if the names are difficult to pronounce or remember.
  • Test the Name: Share the potential name with friends, family, and potential clients to gather feedback and ensure it resonates with your target audience.
  • Check for Domain Availability: Research the availability of your chosen name as a domain name for your website and on social media platforms to ensure a consistent online presence.
  • Avoid Limiting your Business Scope: Choose a flexible name to accommodate future product or service changes. Avoid using specific locations, product names, or niche markets in the name if you plan to expand or diversify later.
  • Comply with Legal Requirements: Ensure the chosen name complies with any legal requirements or restrictions in your jurisdiction, such as avoiding misleading or offensive terms.
  • Consider Professional Input: Consult with Idaho Business Attorney or trademark specialist to ensure your chosen name is legally sound and can be registered as a trademark if necessary.

By following these guidelines, you can choose a name for your general partnership that is memorable, unique, and effectively communicates your business’s essence.

In addition, most general partnership businesses use the last name of all of their partners.  For instance, if Jennie Kim and Lalisa Manoban enter business together, the partnership name is “Kim & Manoban” by default. However, if you would like to form a business name under something more appropriate, such as “EJI Design and Build,” then you’ll need to File a DBA in Idaho with Idaho Secretary of State.

Filing a DBA in Idaho has three methods, online, by mail, and in person filing., which costs around $25 Filing Fee and $20 Additional processing fee if filing a hard copy by mail or in-person. There is Indefinite validity in renewing your DBA. 

In Idaho, if you do not wish to file your general partnership business right away but want to hold the name that you have decided on, then you can reserve your business name for 4 months. You must file a name reservation application in the Idaho Secretary of State to keep the name. 

Step 2: Make a Partnership Agreement

After you have chosen a business name for your general partnership, the next step would be making a partnership agreement in Idaho. A partnership agreement is a crucial document that outlines the terms and conditions governing a partnership. It helps to establish a clear understanding of each partner’s roles, responsibilities, and expectations and prevents disputes and misunderstandings.

Additionally, it discusses business management guidelines and potential contingencies that may arise, such as a partner’s passing or a partner’s decision to leave the partnership.

A partnership agreement should include the following:

  • Business name
  • Description of the business
  • Contact information of the business and its owners

Ownership of all business partners, decision-making, capital contribution, profits and distribution, death and disability, and withdrawal and addition of partners is one of the key factors to consider when forming or creating a partnership agreement. In this way, all business partners will understand what this is all about and how to proceed if the mentioned scenarios happen. 

Without a partnership agreement, your company will often be subject to the general partnership default laws of Idaho. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Idaho

After completing the partnership agreement, you should get or seek an Employer Identification Number (EIN) in Idaho. An EIN will serve as your general partnership’s tax identification number. The Internal Revenue Service can provide you with an EIN. (IRS). It is a nine-digit number comparable to your Social Security number. EIN, on the other hand, is distinct from SSN. It is exclusively used for business-related operations, such as filing general taxes. The form must be filled out and sent to the IRS website. Obtaining an EIN cost between $30 and $280. 

The application of an EIN in Idaho can be through the following:

  • Apply Online- The Online EIN application is the preferred method for customers to apply for and obtain an EIN.
  • Apply by Fax- Taxpayers can fax the completed Form SS-4PDF application to the appropriate fax number), after ensuring that Form SS-4 contains all of the required information.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

You can benefit in various ways once you obtain your EIN number. It will give your general partnership the final advantage to operate at its full potential without legal or court problems.

Step 4: Get a License and a Permit

You must have Idaho Business License before your general partnership business operates. A business license is a document granted by a government agency that allows you to operate your business in the territory governed by that agency.

To legally operate your partnership, you’ll need a business license. You may need more than one license in Idaho. Numerous general partnership licenses need to be filed and renewed regularly.

In Idaho, the business license fee costs about $50 – $300.

You can check out the United States Business License & Licensing Fee Resources for more information about the costs in Idaho.

Step 5: Open a Bank Account

After filing and receiving your general partnership license, you should open a bank account for yourself, your clients, and your employees.

A US bank account may make your business dealings in Idaho easier because it increases your company’s authenticity and profitability. Most banks require an EIN for firms other than sole proprietorships to open a business account. Keeping separate finances also prevents you from combining personal and professional finances.

If you would like to open a bank account in Idaho, check out the Best Bank for Idaho Small Business.

Pros and Cons of a General Partnership in Idaho

In forming a general partnership in Idaho, there are pros and cons that you may experience. I will list the pros and cons for you to understand why and how a general partnership is crucial. 

Pros of Forming a General Partnership in Idaho

  • Easy and Inexpensive to Form: General partnerships are relatively simple to establish, requiring minimal paperwork and registration costs compared to other business structures like corporations or limited liability companies.
  • Decision-Making: Partners can pool their skills, knowledge, and resources, leading to more efficient and effective decision-making and business operations.
  • Flexibility: General partnerships offer flexibility in management structure, profit distribution, and decision-making processes, allowing partners to customize their business relationships to best suit their needs.
  • Tax Benefits: In most jurisdictions, general partnerships are not taxed as separate entities. Instead, profits and losses are passed through to the partners, who report them on their income tax returns. This avoids the issue of double taxation that affects corporations.
  • Greater Access to Capital: With multiple partners, a general partnership may have increased access to capital and resources compared to a sole proprietorship.

Cons of Forming a General Partnership in Idaho

  • Unlimited Personal Liability: In a general partnership, all partners have unlimited personal liability for the debts and obligations of the business. This means that each partner’s personal assets can be used to cover any debts incurred by the partnership, which can be a significant risk.
  • Potential for Conflicts: As partners share management and decision-making responsibilities, disagreements or conflicts can arise, negatively impacting the business’s operations and success.
  • Limited Lifespan: A general partnership’s existence is often tied to the lives of its partners. The partnership may be dissolved if a partner withdraws, becomes incapacitated, or dies, potentially leading to instability and uncertainty.
  • Difficulty in Raising Capital: While general partnerships may have more access to capital than sole proprietorships, they may still need help raising funds compared to corporations or limited liability companies, as investors may be more hesitant to invest in a business with unlimited personal liability.
  • Lack of Legal Distinction: Unlike corporations or limited liability companies, general partnerships do not have a separate legal identity from their partners, limiting the partnership’s ability to enter into contracts or own property in its name.

When considering a general partnership, weighing the pros and cons and assessing whether this business structure aligns with your goals, risk tolerance, and desired level of management involvement is essential.

Maintain Business License in Idaho

You must maintain or renew your business license regularly now that you have established your general partnership. Make time at least once a year to check the status of your licenses. Then you will get everything important. You can deal with any problems that arise. In Idaho, the business license fee ranges from $50 – $300, and varies by jurisdiction and license type.

Pay Your Taxes in Idaho

Even if you have established your general partnership in Idaho, pay your taxes and keep everything up to date so you won’t pay any penalty. 

Idaho taxes information will help you with what to pay before or during the operation of your professional corporation. You can check out the Idaho Small Business Taxes to further understand why you must pay your taxes on time. 

Can I Convert My General Partnership Into Another Business Entity in Idaho?

By following the appropriate state procedures, you can convert your general partnership into another business entity, such as Idaho Corporation converting to an LLC; or Sole Proprietorship to Idaho LLC. This may involve filing conversion documents with the Idaho Secretary of State’s office and paying any required fees.

FAQs

What is a general partnership?
A general partnership is a business structure in which two or more people manage and own a business together.
How do I create a general partnership in Idaho?
To create a general partnership in Idaho, you need to file a Statement of Partnership Authority with the Idaho Secretary of State.
Do I need to file any other paperwork to create a general partnership in Idaho?
No, you don’t need to file any other paperwork to create a general partnership in Idaho.
Can I create a general partnership with just one other person in Idaho?
Yes, you can create a general partnership with just one other person in Idaho.
Do I need to have a written partnership agreement to create a general partnership in Idaho?
No, you don’t need to have a written partnership agreement to create a general partnership in Idaho, but it is highly recommended to avoid potential disputes.
Does Idaho have any residency requirements for partners in a general partnership?
No, Idaho does not have any residency requirements for partners in a general partnership.
Is there a fee to file a Statement of Partnership Authority in Idaho?
Yes, there is a filing fee to submit a Statement of Partnership Authority to the Idaho Secretary of State.
How long does it take to form a general partnership in Idaho?
It usually takes a few days to a week to form a general partnership in Idaho, depending on the processing time of the Secretary of State.
Can I change the name of a general partnership later in Idaho?
Yes, you can change the name of a general partnership in Idaho by filing an Amendment to Partnership Authority with the Secretary of State.
How many partners can a general partnership have in Idaho?
A general partnership can have up to 100 partners in Idaho.
Do partners in a general partnership in Idaho all have equal rights and liabilities?
Yes, in a general partnership in Idaho, all partners have equal rights and liabilities.
Can partners in a general partnership in Idaho take out loans on behalf of the partnership?
Yes, partners in a general partnership in Idaho can take out loans on behalf of the partnership, subject to the terms of the partnership agreement.
Can a general partnership in Idaho own property?
Yes, a general partnership in Idaho can own property in its own name.
Is a general partnership in Idaho liable for the actions of its partners?
Yes, a general partnership in Idaho is liable for the actions of its partners, as long as those actions are carried out in the scope of the partnership’s business.
Can I register my general partnership in Idaho if I already registered it in another state?
Yes, you can register your general partnership in Idaho as a foreign entity if it is already registered in another state.
What taxes does a general partnership in Idaho need to pay?
A general partnership in Idaho does not pay taxes at the entity level; instead, all income and losses pass through to the partners’ personal tax returns.
Can partners receive a salary or wages from a general partnership in Idaho?
No, partners in a general partnership in Idaho cannot receive a salary or wages. They can only receive income from their share of the profits.
Is a general partnership in Idaho required to have a registered Agent for Service of Process?
Yes, a general partnership in Idaho is required to have a registered Agent for Service of Process resident in Idaho.
Can a general partnership in Idaho convert to a different business structure?
Yes, a general partnership in Idaho can convert to a different business structure, such as an LLC or a corporation.
Do partners in a general partnership in Idaho have any fiduciary duties to each other?
Yes, partners in a general partnership in Idaho have a duty of loyalty and a duty of care to each other.
What happens if one partner leaves a general partnership in Idaho?
If one partner leaves a general partnership in Idaho, the partnership is not dissolved, and the remaining partners continue to run the business.
What happens if a partner dies in a general partnership in Idaho?
If a partner dies in a general partnership in Idaho, the partnership is dissolved, unless the partners have agreed to continue the business after one partner’s death.
Can partners in a general partnership in Idaho sell their shares without the other partners’ approval?
No, partners in a general partnership in Idaho cannot sell their shares without the approval of the other partners, unless the partnership agreement states otherwise.
Can a creditor go after a partner’s personal assets in a general partnership in Idaho?
Yes, a creditor can go after a partner’s personal assets in a general partnership in Idaho if the partnership’s assets are not enough to cover the debt.
Can a general partnership in Idaho be sued in court?
Yes, a general partnership in Idaho can be sued in court, just like any other legal entity.
Is a general partnership in Idaho required to keep any records?
Yes, a general partnership in Idaho is required to keep accurate and complete records of the partnership’s finances.
Can partners in a general partnership in Idaho have different ownership percentages?
Yes, partners in a general partnership in Idaho can have different ownership percentages by agreement agreed in their partnership agreement.
Do partners in a general partnership in Idaho need to make equal financial contributions to the partnership?
No, partners in a general partnership in Idaho do not need to make equal financial contributions, as long as they agree on the terms of their partnership agreement.
Can a general partnership in Idaho be registered under a DBA?
Yes, a general partnership in Idaho can be registered under a DBA if the partners choose to do so.
What is a general partnership in Idaho?
A general partnership in Idaho is a type of business that is jointly run by two or more people.
What are the requirements for creating a general partnership in Idaho?
The partnership agreement must include the names of the partners, the business name, the address of the business, and the type of business.
Is there a fee to create a general partnership in Idaho?
Yes, there is a filing fee to create a general partnership in Idaho.
How much is the filing fee to create a general partnership in Idaho?
The filing fee to create a general partnership in Idaho is currently $100.
Are there any annual fees for a general partnership in Idaho?
No, there are no annual fees for a general partnership in Idaho.
Do I need to register my general partnership in Idaho for taxes?
Yes, you need to register your general partnership in Idaho for taxes.
How do I register my general partnership for taxes in Idaho?
You register your general partnership for taxes in Idaho by filing an Application for Registration with the Idaho State Tax Commission.
Do I need a business license to operate a general partnership in Idaho?
It depends on the location and type of business. Many Idaho cities and counties require a business license.
What taxes does my general partnership need to pay in Idaho?
Your general partnership needs to pay Idaho state income taxes and business taxes.
How do I pay Idaho state income taxes as a general partnership?
You pay Idaho state income taxes as a general partnership by filing an Idaho Partnership Income Tax Return.
How do I pay Idaho business taxes as a general partnership?
You pay Idaho business taxes as a general partnership by filing a Quarterly Idaho Business Income Tax Withholding Return.
Do I need to carry liability insurance for my general partnership in Idaho?
It is not required by law, but it is recommended that you carry liability insurance.
Can an out-of-state citizen partner in my Idaho general partnership?
Yes, an out-of-state citizen can partner in an Idaho general partnership, but they will need to file a Foreign Registration Statement with the Idaho Secretary of State.
Do I need to file my partnership agreement with the county clerk’s office?
No, you do not need to file your partnership agreement with the county clerk’s office.
How do I dissolve my general partnership in Idaho?
You must file paperwork with the Idaho Secretary of State to dissolve your general partnership.
Can I dissolve my general partnership in Idaho without my partner’s consent?
No, you will need your partner’s consent to dissolve your general partnership in Idaho.
Can my partner and I use the same social security number?
No, each partner must use his or her own social security number.
What happens if one partner wants to leave the general partnership?
The partnership agreement should outline the terms of a partner leaving the partnership.
Can my general partnership pay me a salary?
Yes, your general partnership can pay you a salary if it is decided in the partnership agreement.
Can my general partnership take on debt?
Yes, your general partnership can take on debt with the permission of all partners.
Can my general partnership file for bankruptcy?
Yes, your general partnership can file for bankruptcy in Idaho.
Can my general partnership register a trademark in Idaho?
Yes, your general partnership can register a trademark in Idaho.
Can I change my general partnership’s name?
Yes, you can change your general partnership’s name by filing an Entity Name Reservation Request with the Idaho Secretary of State.
Can I transfer a partnership interest in an Idaho general partnership?
Yes, you can transfer a partnership interest in an Idaho general partnership with the permission of all partners.
Can I add a new partner to an existing Idaho general partnership?
Yes, you can add a new partner to an existing Idaho general partnership with the permission of all partners.
Who needs to sign the partnership agreement for an Idaho general partnership?
All partners need to sign the partnership agreement for an Idaho general partnership.
How long does it take to create an Idaho general partnership?
It can take up to two weeks to create an Idaho general partnership.
Can I convert my Idaho general partnership to a different business entity type?
Yes, you can convert your Idaho general partnership to a different business entity type with the permission of all partners.

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Conclusion

A general partnership can be viable for individuals looking to establish a business in Idaho with shared decision-making, management responsibilities, and profits. This type of business structure is relatively simple to establish and offers flexibility in operations. However, it is essential for potential partners to carefully consider the unlimited personal liability aspect of general partnerships, which means that each partner’s personal assets could be at risk to cover any debts or obligations incurred by the business. Before forming a general partnership, the partners should have a clear and well-drafted partnership agreement that outlines the roles, responsibilities, profit-sharing, and dispute-resolution mechanisms to ensure a smooth working relationship and minimize potential conflicts. Partners should also explore other business structures, like limited liability partnerships or corporations, to determine the best fit for their needs and goals.

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