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


Steve Bennett
Steve Bennett
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Create a General Partnership in Nebraska

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

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

What is General Partnership in Nebraska?

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

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

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

Filing a DBA in Nebraska has two methods, by mail and in person., which costs around $100. There is ten years validity in renewing your DBA. 

In Nebraska, 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 120 days. You must file a name reservation application in the Nebraska 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 Nebraska. 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 Nebraska. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Nebraska

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

In Nebraska, 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 Nebraska.

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

Pros and Cons of a General Partnership in Nebraska

In forming a general partnership in Nebraska, 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 Nebraska

  • 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 Nebraska

  • 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 Nebraska

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

Pay Your Taxes in Nebraska

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

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

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

FAQs

What is a general partnership in Nebraska?
A general partnership in Nebraska is a business structure in which two or more people share ownership and management of a business, and in which profits and losses are shared equally between partners.
What are the requirements to create a general partnership in Nebraska?
To create a general partnership in Nebraska, you need to file a Certificate of Partnership with the Secretary of State, and appoint a registered agent with a physical address in Nebraska.
Is there a minimum number of partners required to form a general partnership in Nebraska?
No, there is no minimum number of partners required to form a general partnership in Nebraska. A partnership can have as few as two partners.
Is a written partnership agreement required to create a general partnership in Nebraska?
No, a written partnership agreement is not required to create a general partnership in Nebraska, but it is recommended to have one to establish the terms and conditions of the partnership.
What are the advantages of forming a general partnership in Nebraska?
Some advantages of forming a general partnership in Nebraska include sharing of profits and losses, having more resources and skills available, and the flexibility to allocate responsibilities and workloads among partners.
Are there any disadvantages of forming a general partnership in Nebraska?
There are some disadvantages of forming a general partnership in Nebraska, such as unlimited personal liability for partners, potential for partner disputes, and dependence on the actions of other partners.
Can a general partnership in Nebraska have a DBA (doing business as) name?
Yes, a general partnership in Nebraska can have a DBA (doing business as) name. You need to file a Certificate of Partnership under the DBA name with the Secretary of State.
How do partners in a general partnership in Nebraska share profits and losses?
Partners in a general partnership in Nebraska share profits and losses equally, unless otherwise specified in a written partnership agreement.
Can partners in a general partnership in Nebraska decide to split profits unequally?
Yes, partners in a general partnership in Nebraska can decide to split profits unequally, but it needs to be stated explicitly in a written partnership agreement.
How are general partnerships in Nebraska taxed?
General partnerships in Nebraska are not subject to state income tax, but they are required to file a partnership tax return (Form 1065).
Do partners in a general partnership in Nebraska need to pay self-employment tax?
Yes, partners in a general partnership in Nebraska are subject to self-employment tax on their share of partnership profits.
What is the liability of partners in a general partnership in Nebraska?
Partners in a general partnership in Nebraska have unlimited personal liability for the debts and obligations of the partnership.
Are partners in a Nebraska general partnership personally responsible for the acts of other partners?
Yes, partners in a Nebraska general partnership are personally responsible for the acts of other partners if the acts were carried out in the course of partnership business.
Can partners in a Nebraska general partnership be held liable for wrongful acts of other partners?
Yes, partners in a Nebraska general partnership can be held jointly and severally liable for wrongful acts of other partners, including fraud, breach of trust, or other illegal activities.
Can partners in a general partnership in Nebraska take legal action against each other?
Yes, partners in a general partnership in Nebraska can take legal action against each other for breach of partnership agreements or other disputes.
What happens if a partner dies or leaves a general partnership in Nebraska?
If a partner dies or leaves a general partnership in Nebraska, the partnership is dissolved unless there are specific provisions in a written partnership agreement for the continuation of the partnership.
Can partners in a Nebraska general partnership assign their interests to others?
Yes, partners in a Nebraska general partnership can assign their interests to others, but it requires the consent of all other partners in the partnership.
Is it possible to change the partnership agreement in a general partnership in Nebraska?
Yes, it is possible to change the partnership agreement in a general partnership in Nebraska, but it requires the consent of all partners and preferably a written agreement.
Can a non-resident of Nebraska be a partner in a Nebraska general partnership?
Yes, a non-resident of Nebraska can be a partner in a Nebraska general partnership, but the partnership needs to appoint a registered agent with a physical address in Nebraska.
How long does it take to register a general partnership in Nebraska?
It takes around 2-3 weeks to register a general partnership in Nebraska if all required documents are filed correctly.
What is the fee to register a general partnership in Nebraska?
The fee to register a general partnership in Nebraska is $100.
Does Nebraska have any specific rules for partnership names?
Yes, Nebraska partnership names must indicate that it is a partnership and can’t be identical or confusingly similar to other partnership names or trademarks.
Can a general partnership in Nebraska be a member of an LLC?
Yes, a general partnership in Nebraska can be a member of an LLC.
Is it possible to turn a general partnership in Nebraska into an LLC?
Yes, it is possible to turn a general partnership in Nebraska into an LLC by filing Articles of Organization with the Secretary of State.
Can a general partnership in Nebraska have employees?
Yes, a general partnership in Nebraska can have employees, and partners are considered employees for Social Security and Medicare purposes.
Does Nebraska require general partnerships to have insurance?
No, Nebraska does not require general partnerships to have insurance, but it is recommended to have liability insurance to protect against personal liability.
Does Nebraska have any special tax incentives or programs for general partnerships?
No, Nebraska does not have any special tax incentives or programs for general partnerships, but they may be eligible for general business tax credits and exemptions.
What is the biggest advantage of a general partnership in Nebraska?
The biggest advantage of a general partnership in Nebraska is the ability to share resources and skills without the hindrance of individual liabilities or bureaucracy.
How do I register a general partnership in Nebraska?
To register a general partnership in Nebraska, you must file a Certificate of Partnership with the Nebraska Secretary of State.
Can I form a general partnership in Nebraska on my own?
No, you must have at least one more partner to form a general partnership in Nebraska.
What are the disadvantages of forming a general partnership in Nebraska?
The disadvantages of a general partnership in Nebraska include unlimited liability, shared profits regardless of contribution, and the potential for disputes and disagreements between partners.
Are there any residency requirements for partners in a general partnership registered in Nebraska?
No, as long as one partner in a general partnership is a Nebraska resident, the partnership can be registered in Nebraska.
Can a general partnership in Nebraska have a DBA (Doing Business As) name?
Yes, a general partnership in Nebraska can operate under a DBA name as long as it meets the state’s requirements and is registered with the Nebraska Secretary of State.
Is an operating agreement required for a general partnership in Nebraska?
No, an operating agreement is not required to form a general partnership in Nebraska. However, it is highly recommended to avoid future disputes among the partners.
What is the cost to register a general partnership in Nebraska?
The filing fee for registering a general partnership in Nebraska is $100.
Do I need to obtain any licenses or permits to operate a general partnership in Nebraska?
A general partnership in Nebraska may need to obtain certain licenses or permits depending on the type of business they operate and the state regulations.
Can an out-of-state business register as a general partnership in Nebraska?
Yes, an out-of-state business can register in Nebraska as a general partnership if they meet the necessary requirements and file the appropriate paperwork with the Nebraska Secretary of State.
Do I need to file annual reports for a general partnership in Nebraska?
Yes, general partnerships registered in Nebraska are required to file an annual report with the Nebraska Secretary of State.
How is the income from a general partnership in Nebraska taxed?
The income from a general partnership in Nebraska is not directly taxed, instead, the owners report and pay taxes on their share of the business’s profits on their individual tax returns.
What happens if a partner withdraws from a general partnership in Nebraska?
The remaining partners in the general partnership can either buy-out the withdrawing partner’s share, and liabilities or they can dissolve the partnership.
Can a bankrupt person be a partner in a general partnership registered in Nebraska?
A bankrupt person can be a partner in a general partnership registered in Nebraska, but they may need to file additional paperwork to declare their bankruptcy status.
What happens if a partner dies in a general partnership registered in Nebraska?
The remaining partners can either buy-out the deceased partner’s share or they can dissolve the partnership.
Can a general partnership be converted into a corporation in Nebraska?
Yes, a general partnership in Nebraska can be converted into a corporation through a process known as conversion.
Can a partnership have a single decision-maker in Nebraska?
Yes, a general partnership could have designated a single decision-maker as long as it is uncontested and stated in their partnership agreement.
Can I change the name of my general partnership in Nebraska once it’s registered?
Yes, you can change your general partnership’s name in Nebraska by filing an amendment with the secretary of state and paying the required fee of $10.
Can a general partnership apply for loans in Nebraska?
Yes, a general partnership can apply for loans in Nebraska; however, the partnership and its partners will be liable for any debt incurred.
Can partners have different voting powers in a general partnership registered in Nebraska?
Yes, partners in a general partnership in Nebraska can have different voting powers based on their percentage share of ownership.
Is it mandatory for a general partnership in Nebraska to pay the minimum wage rate to its employees?
Yes, a general partnership in Nebraska must pay at least the minimum wage rate to its employees as per the state law.
Can a general partnership be incorporated in a different state than Nebraska and still operate in Nebraska?
Yes, a general partnership incorporated in a different state and operating in Nebraska will be considered as a foreign general partnership that must be registered with the Secretary of State’s office.
Are there restrictions on the number of partners in a general partnership that can be registered in Nebraska?
There are no limitations on the number of partners in a general partnership registered in Nebraska.
Is Nebraska business registered as general partnerships required to get an EIN (Employer Identification Number)?
If the general partnership is planning to hire employees or file certain tax documents, then yes, it should get an EIN from the IRS.
Can a general partnership in Nebraska enter a contract and file a lawsuit?
Yes, a general partnership in Nebraska can enter into a contract and file a lawsuit in the partnership’s name.
Can a general partnership in Nebraska have limited partners?
Yes, a general partnership in Nebraska may also have limited partners if structured as a limited liability partnership (LLP), though limited partners may generally not participate in certain aspects of managing the business operations.
Can a foreign-general partnership doing business in Nebraska be sued in state courts?
Yes, a foreign-general partnership can be sued in Nebraska courts if they have done business activities in the state subject to long-arm jurisdiction limitations.

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Conclusion

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