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

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Create a General Partnership in Missouri

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

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

Steps in Creating a General Partnership in Missouri

What is General Partnership in Missouri?

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

It is recommended that you consult to Missouri 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 Missouri 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
  • Missouri 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 Missouri

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

Filing a DBA in Missouri has three methods, online, by mail, and in person filing., which costs around $7. There is five years validity in renewing your DBA. 

In Missouri, 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 Missouri 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 Missouri. 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 Missouri. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Missouri

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

In Missouri, 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 Missouri.

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

Pros and Cons of a General Partnership in Missouri

In forming a general partnership in Missouri, 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 Missouri

  • 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 Missouri

  • 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 Missouri

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

Pay Your Taxes in Missouri

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

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

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

FAQs

What is a general partnership?
A general partnership is a type of business structure in which two or more individuals own and manage a business together.
How do I create a general partnership in Missouri?
To create a general partnership in Missouri, you must file a certificate of partnership with the Secretary of State.
What information is required on a Missouri certificate of partnership?
A Missouri certificate of partnership must include the name of the partnership, the name and address of each partner, and the partnership’s principal place of business.
What is the filing fee for a Missouri certificate of partnership?
The filing fee for a Missouri certificate of partnership is $50.
Can I file a Missouri certificate of partnership online?
No, you must file a Missouri certificate of partnership by mail.
How long does it take to process a Missouri certificate of partnership?
It typically takes two to four weeks to process a Missouri certificate of partnership.
Do I need to obtain any licenses or permits to operate a general partnership in Missouri?
It depends on the nature of your business. Some businesses require licenses or permits from the state or local government.
Do I need to register my partnership with the Missouri Department of Revenue?
Yes, all partnerships in Missouri are required to register with the Missouri Department of Revenue.
What taxes will a Missouri general partnership have to pay?
A Missouri general partnership will have to pay state income tax and federal self-employment tax.
Do partners in a Missouri general partnership have limited liability?
No, partners in a Missouri general partnership have unlimited personal liability for the debts and obligations of the business.
Can a partner in a Missouri general partnership be held personally liable for another partner’s actions?
Yes, each partner in a Missouri general partnership is jointly and severally liable for the actions of each other partner.
Can a Missouri general partnership have employees?
Yes, a Missouri general partnership can hire employees.
Do I need to have a written partnership agreement in Missouri?
No, although it is recommended that partners have a written partnership agreement that outlines the terms and conditions of their partnership.
What happens to a Missouri general partnership when one partner dies or leaves the partnership?
The partnership can either be dissolved or the remaining partners can continue to operate the business.
Can a partner transfer their interest in a Missouri general partnership to someone else?
Yes, a partner can transfer their interest in a Missouri general partnership, but the transfer may require the consent of the other partners.
What happens if one partner breaches the partnership agreement in Missouri?
The other partners can seek legal remedies against the breaching partner.
Can I register my Missouri general partnership as a limited liability partnership?
Yes, Missouri allows for the registration of limited liability partnerships.
What is the benefit to registering a general partnership as a limited liability partnership?
A limited liability partnership provides some protection against personal liability for the debts and obligations of the business.
Are there any disadvantages to registering a general partnership as a limited liability partnership in Missouri?
Yes, it may be more expensive to register as a limited liability partnership, and there may be more paperwork required.
Do I need to have a registered agent for my Missouri general partnership?
Yes, all Missouri partnerships are required to have a registered agent.
Can a partner in a Missouri general partnership sue the partnership?
Yes, a partner can sue the partnership, but any damages recovered may be shared among all partners.
How do I dissolve a Missouri general partnership?
A Missouri general partnership can be dissolved by agreement among the partners, or by court order.
How do I register my Missouri general partnership with the IRS?
You do not need to register your Missouri general partnership with the IRS, but the partnership will need to obtain an Employer Identification Number (EIN).
How do I obtain an EIN for my Missouri general partnership?
You can obtain an EIN for your Missouri general partnership through the IRS website, by mail, by fax, or by phone.
Can I change the name of my Missouri general partnership?
Yes, you can change the name of your Missouri general partnership by filing an amendment to your certificate of partnership.
Can a Missouri general partnership buy or sell assets?
Yes, a Missouri general partnership can buy or sell assets as long as it is in compliance with all applicable laws and regulations.
Can a Missouri general partnership be sued?
Yes, a Missouri general partnership can be sued by its partners, creditors, or third parties.
How do I renew my Missouri general partnership?
Missouri partnerships are not required to renew their registrations, but they may need to update their information with the Secretary of State.
What is a general partnership in Missouri?
A general partnership in Missouri is a business formed by two or more people who agree to share profits and losses.
Do I need a lawyer to create a general partnership in Missouri?
No, you don’t need a lawyer to create a general partnership in Missouri. However, it is recommended that you seek legal advice before forming a partnership.
How much does it cost to create a general partnership in Missouri?
The filing fee for creating a general partnership in Missouri is $50.
Can a general partnership be formed for any purpose in Missouri?
Yes, a general partnership can be formed for any lawful purpose in Missouri.
Are there any naming requirements for a general partnership in Missouri?
No, there are no specific naming requirements for general partnerships in Missouri.
Do partners in a general partnership have personal liability for the partnership’s debts in Missouri?
Yes, partners in a general partnership have personal liability for the partnership’s debts in Missouri.
Can partners in a general partnership in Missouri be held liable for each other’s actions?
Yes, partners in a general partnership in Missouri can be held liable for each other’s actions.
Do partners in a general partnership in Missouri have to contribute equal amounts of capital?
No, partners in a general partnership in Missouri do not have to contribute equal amounts of capital.
Can partners in a general partnership in Missouri have different roles and responsibilities?
Yes, partners in a general partnership in Missouri can have different roles and responsibilities.
How are profits and losses divided among partners in a general partnership in Missouri?
Profits and losses are divided according to the partnership agreement in Missouri.
Is the partnership agreement in Missouri required to be in writing?
No, the partnership agreement in Missouri does not have to be in writing. However, a written agreement is recommended.
Can a general partnership in Missouri be dissolved without all partners agreeing?
No, all partners must agree to dissolve a general partnership in Missouri.
Are partners in a general partnership in Missouri required to pay self-employment taxes?
Yes, partners in a general partnership in Missouri are required to pay self-employment taxes.
Can a partner in a general partnership also be an employee of the partnership in Missouri?
Yes, a partner in a general partnership in Missouri can also be an employee of the partnership.
Can I add partners to my general partnership in Missouri after it’s been formed?
Yes, you can add partners to a general partnership in Missouri after it’s been formed.
Can partners in a general partnership in Missouri transfer their ownership interests?
Yes, partners in a general partnership in Missouri can transfer their ownership interests.
Is a general partnership in Missouri required to have insurance?
No, a general partnership in Missouri is not required to have insurance. However, it is recommended.
Can a general partnership in Missouri own property?
Yes, a general partnership in Missouri can own property.
Are partners in a general partnership in Missouri considered employees?
No, partners in a general partnership in Missouri are not considered employees.
How are decision made in a general partnership in Missouri?
Decisions are made according to the partnership agreement in Missouri.
Can partners in a general partnership in Missouri be held liable for damages caused by contractors hired by the partnership?
Yes, partners in a general partnership in Missouri can be held liable for damages caused by contractors hired by the partnership.
Can a general partnership in Missouri own and operate more than one business?
Yes, a general partnership in Missouri can own and operate more than one business.
Do partners in a general partnership in Missouri have to be Missouri residents?
No, partners in a general partnership in Missouri do not have to be Missouri residents.
Can a general partnership in Missouri be taxed as an S Corporation?
No, a general partnership in Missouri cannot be taxed as an S Corporation.
Can a general partnership in Missouri raise money by selling stocks?
No, a general partnership in Missouri cannot raise money by selling stocks.
Can a general partnership in Missouri be sued?
Yes, a general partnership in Missouri can be sued.
Can a partner in a general partnership in Missouri be removed without cause?
No, a partner in a general partnership in Missouri cannot be removed without cause.
Are partners in a general partnership in Missouri required to provide reports or accounting to each other?
Yes, partners in a general partnership in Missouri are required to provide reports or accounting to each other according to the partnership agreement.

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Conclusion

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