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

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Create a General Partnership in Louisiana

If you would like to create a general partnership in Louisiana, 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 Louisiana 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 Louisiana.

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

Steps in Creating a General Partnership in Louisiana

What is General Partnership in Louisiana?

A general partnership in Louisiana 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 Louisiana Corporations or limited liability partnerships.

It is recommended that you consult to Louisiana 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 Louisiana rather than a general partnership.

– WEBINARCARE EDITORIAL TEAM

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
  • Louisiana 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 Louisiana

To create a general partnership in Louisiana, 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 Louisiana. 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 Louisiana 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 Louisiana with Louisiana Secretary of State.

Filing a DBA in Louisiana has three methods, online, by mail, and in person filing., which costs around $75 Filing Fee and $300 for 24-hour Expedited fiiling. There is ten years validity in renewing your DBA. 

In Louisiana, 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 60 days. You must file a name reservation application in the Louisiana 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 Louisiana. 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 Louisiana. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Louisiana

After completing the partnership agreement, you should get or seek an Employer Identification Number (EIN) in Louisiana. 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 Louisiana 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 Louisiana 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 Louisiana. Numerous general partnership licenses need to be filed and renewed regularly.

In Louisiana, 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 Louisiana.

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 Louisiana 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 Louisiana, check out the Best Bank for Louisiana Small Business.

Pros and Cons of a General Partnership in Louisiana

In forming a general partnership in Louisiana, 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 Louisiana

  • 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 Louisiana

  • 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 Louisiana

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 Louisiana, the business license fee ranges from $50 – $300, and varies by jurisdiction and license type.

Pay Your Taxes in Louisiana

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

Louisiana taxes information will help you with what to pay before or during the operation of your professional corporation. You can check out the Louisiana 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 Louisiana?

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

FAQs

What is a general partnership in Louisiana?
A general partnership is a legal structure where two or more individuals manage and own a business together, sharing in the profits and losses.
How do I form a general partnership in Louisiana?
To form a general partnership in Louisiana, you need to file a Partnership Registration form with the Louisiana Secretary of State.
Is a partnership agreement required for a general partnership in Louisiana?
No, a written partnership agreement is not legally required in Louisiana, but it is highly recommended to avoid disputes.
How do I dissolve a general partnership in Louisiana?
A general partnership in Louisiana can be dissolved either by unanimous agreement of the partners or by court order.
How is the liability of a general partnership in Louisiana enforced?
The individual partners in a general partnership in Louisiana are personally liable for the debts and obligations of the partnership.
Can a general partnership in Louisiana own property?
Yes, a general partnership in Louisiana can own property and other business assets.
How is the income of a general partnership in Louisiana taxed?
A general partnership in Louisiana is a pass-through entity, which means that the partnership’s income is divided among the partners and taxed at their individual tax rates.
Does Louisiana require annual reports or filings for general partnerships?
No, Louisiana does not require general partnerships to file annual reports or other documentation.
How do I name my general partnership in Louisiana?
Louisiana law does not specify any formal naming rules for general partnerships, but the name should be distinguishable from other businesses in the state.
Are there any licensing or permit requirements for general partnerships in Louisiana?
Depending on the nature of the business, certain licenses or permits may be required from Louisiana state or local government agencies.
Can a non-resident be a partner in a Louisiana general partnership?
Yes, individuals who are not Louisiana residents can be partners in a general partnership in Louisiana.
Who is responsible for signing legal documents for a general partnership in Louisiana?
Typically, all partners in a general partnership in Louisiana must sign legal documents on behalf of the partnership.
Can a partner in a Louisiana general partnership be held personally responsible for the actions of another partner?
Yes, partners in a Louisiana general partnership are generally jointly and severally liable for all business obligations and debts.
How are disputes between partners in a Louisiana general partnership resolved?
Depending on the nature of the dispute, a verbal or written partnership agreement may govern resolution, or legal action may be necessary.
Can a general partnership in Louisiana change its business purpose or operations over time?
Yes, a general partnership in Louisiana may change its business purpose or operations as needed, but partners should update their partnership agreement accordingly.
How are assets and liabilities divided when a Louisiana general partnership is dissolved?
The partners in a Louisiana general partnership are entitled to share in the assets and profits of the business during dissolution after all liabilities are resolved.
What is required to formally change the name of a Louisiana general partnership?
To change the name of a Louisiana general partnership, a new Partnership Registration form must be submitted to the Louisiana Secretary of State.
Can a general partnership in Louisiana issue stocks or securities?
No, general partnerships in Louisiana cannot issue stocks or equity securities like corporations.
How many partners are allowed in a Louisiana general partnership?
Louisiana law does not set a cap on the number of partners in a general partnership.
Can a Louisiana general partnership convert to another business structure over time?
Yes, a general partnership in Louisiana can convert to a different legal structure like a limited partnership or limited liability company (LLC).
How is a new partner added to an existing Louisiana general partnership?
A new partner can be added to a Louisiana general partnership either by unanimous agreement or a vote of the existing partners.
Can a Louisiana general partnership have different classes of partners?
Yes, a Louisiana general partnership can have different classes of partners with varied responsibilities and compensation structures.
What are some advantages of a Louisiana general partnership compared to other business structures?
Some advantages of a general partnership in Louisiana include relaxed operational requirements, easier formation and dissolving, and flexible control structures.
Are online legal services sufficient for creating a Louisiana general partnership?
While online legal services can be useful, it’s always recommended to consult with an experienced attorney to ensure that everything is done properly and in compliance with Louisiana law.
How long does it take to register a general partnership in Louisiana?
It usually takes 2-3 business days for the Louisiana Secretary of State to process a Partnership Registration form.
Can a Louisiana general partnership own real estate?
Yes, a Louisiana general partnership can own real estate and other property.
Can a Louisiana general partnership have a trade name?
Yes, a Louisiana general partnership can use a trade name as long as it’s registered properly with the state.
Are partners in a Louisiana general partnership responsible for each other’s wrongful conduct?
Yes, a partner in a Louisiana general partnership can be held liable for wrongful acts committed by another partner in the course of business.
How do I create a general partnership in Louisiana?
To create a general partnership in Louisiana, you must file a partnership registration with the Louisiana Secretary of State.
What information do I need to include in my partnership registration in Louisiana?
Your partnership registration in Louisiana should include the names and addresses of all partners, the name of the partnership, and the purpose of the business.
Can I create a general partnership in Louisiana without a written partnership agreement?
Yes, you can create a general partnership in Louisiana without a written partnership agreement, but it’s not recommended because it can lead to disagreements among partners.
How is a general partnership in Louisiana taxed?
A general partnership in Louisiana is not taxed at the entity level. Instead, each partner is taxed on their share of the partnership’s income.
What is the liability of partners in a general partnership in Louisiana?
Each partner in a general partnership in Louisiana is personally liable for the debts and obligations of the partnership.
Do I need to file annual reports for my general partnership in Louisiana?
Yes, you need to file an annual report for your general partnership in Louisiana with the Secretary of State.
How long does it take for my partnership registration to be approved in Louisiana?
The partnership registration process in Louisiana usually takes about two to three weeks.
Can a foreign business create a general partnership in Louisiana?
Yes, a foreign business can create a general partnership in Louisiana as long as it complies with all the state’s registration requirements.
Do I need a registered agent for my general partnership in Louisiana?
Yes, your general partnership in Louisiana must have a registered agent with a physical address in the state.
What is a certificate of authority in Louisiana?
A certificate of authority in Louisiana is a document that gives a foreign business permission to do business in the state.
How do I obtain a certificate of authority in Louisiana for my general partnership?
To obtain a certificate of authority in Louisiana for your general partnership, you must file an application with the Louisiana Secretary of State.
Do I need to obtain any licenses or permits to operate my general partnership in Louisiana?
Depending on your business activity, you may need to obtain licenses or permits from the state of Louisiana or local municipalities.
What is the cost to register my general partnership in Louisiana?
The cost to register a general partnership in Louisiana is $100.
Can I change the name of my general partnership in Louisiana?
Yes, you can change the name of your general partnership in Louisiana by filing an amendment with the Secretary of State.
When do I need to file a renewal for my general partnership in Louisiana?
You need to file a renewal for your general partnership in Louisiana every three years.
Can I convert my general partnership into a different business entity in Louisiana?
Yes, you can convert your general partnership into a different business entity in Louisiana.
Do I need legal assistance to create a general partnership in Louisiana?
It’s not mandatory to have legal assistance, but we suggest consulting with a lawyer to understand your rights, obligations and taxation scheme of the state
Can non-US residents create a general partnership in Louisiana?
Yes, non-US residents can create a general partnership in Louisiana as long as they comply with all the state’s registration requirements.
What happens if a partner withdraws from the general partnership in Louisiana?
If a partner withdraws from a general partnership in Louisiana, the partnership might need to be dissolved and restructured as per Fairness regulations.
Do partners in a general partnership in Louisiana necessarily have equal shares in the business?
No, partners in a general partnership in Louisiana don’t necessarily have equal shares. Their percentage of profits/loss can differ depending on their partnership agreement.
Can a general partnership in Louisiana have employees?
Yes, a general partnership in Louisiana can have employees and must follow Louisiana Employment law.
Is my general partnership required to keep records of its legal documentation?
Yes, keeping your partnership documentation records safe can be helpful in terms of accounting, tax filings and incidentally during lawsuits in future.
Can the partnership create a form to include all partners on a desire document?
Yes, The partnership agreement can be written which mentions all partners name, share percentage, rights and every significant agreement on specific document.
If my general partnership fails in Louisiana, what happens to debts and liabilities?
Each partner is personally liable in Louisiana, thus each partner has to discuss and help to fulfill remaining dues/ liabilities of the general partnership.
Does a general partnership in Louisiana require an annual meeting?
Not necessarily, the Partnership agreement has to mention everything. Somemtimes, an annual meeting is a good way to keep discussion flowing and get regular updates and accountability.
Can a business partner who isn’t officially associated with a general partnership in Louisiana if they never completed the partnership registration process?
NO, official partnership procedure needs completion of registration process in partnership law lest such person will not be considered genuine partner.
Can a partner be vetoed from an assigned position in running day-to-day operations in the partnerships?
There could always be certain valid conditions for that and every partnership got liberty on type of clauses to be included.
What is the annual franchise tax fee imposed on General Partnership in Louisiana?
Louisiana imposes annual franchise tax fee for General Partnership calculated upon the total capital in Louisiana asset needing the tax.

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Conclusion

A general partnership can be viable for individuals looking to establish a business in Louisiana 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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