How to Create a General Partnership in New York | A Complete Guide


Steve Bennett
Steve Bennett
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Create a General Partnership in New York

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

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

What is General Partnership in New York?

A general partnership in New York 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 New York Corporations or limited liability partnerships.

It is recommended that you consult to New York 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 New York 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
  • New York 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 New York

To create a general partnership in New York, 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 New York. 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 New York 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 New York with New York Department of State.

Filing a DBA in New York has two methods, by mail and in person., which costs around $25. There is Indefinite validity in renewing your DBA. 

In New York, 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 New York Department 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 New York. 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 New York. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in New York

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

In New York, 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 New York.

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 New York 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 New York, check out the Best Bank for New York Small Business.

Pros and Cons of a General Partnership in New York

In forming a general partnership in New York, 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 New York

  • 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 New York

  • 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 New York

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

Pay Your Taxes in New York

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

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

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

FAQs

What is a general partnership in New York?
A general partnership in New York is a business entity where two or more individuals agree to share profits and losses.
Do I need to file any paperwork to form a general partnership in New York?
No, you do not need to file any paperwork with the state of New York to form a general partnership. However, it is recommended that you create a partnership agreement to outline the terms of your partnership.
How do I create a partnership agreement in New York?
You can create a partnership agreement by discussing and agreeing upon the terms with your partner(s) and putting them in writing. It is recommended that you consult with an attorney to ensure that your partnership agreement complies with New York laws.
Is a partnership agreement legally required in New York?
No, a partnership agreement is not legally required in New York, but it is recommended to protect the partners and the business.
What are the benefits of having a partnership agreement in place in New York?
A partnership agreement allows you to establish the terms of your partnership, including how profits and losses will be divided, decision-making authority, and how to resolve disputes.
How are taxes handled in a New York general partnership?
In a New York general partnership, the partnership itself does not pay taxes, but partners report their share of the partnership’s income or loss on their personal tax return.
Can foreigners form a general partnership in New York?
Yes, foreigners are allowed to form a general partnership in New York, but they may need to comply with additional requirements.
Is there a limit to the number of partners that can be in a New York general partnership?
No, there is no limit to the number of partners that can be in a New York general partnership.
Can I convert an existing New York business into a general partnership?
Yes, you can convert an existing business into a general partnership in New York by creating a partnership agreement and changing the structure of your business.
Do I need to register my New York general partnership with the state?
No, you do not need to register your New York general partnership with the state, but you may need to obtain certain permits or licenses to operate your business.
What are the liabilities of partners in a New York general partnership?
In a New York general partnership, each partner is personally liable for all of the business’s debts and legal obligations.
Can I form a general partnership in New York with a corporation as a partner?
Yes, it is possible to form a general partnership in New York with a corporation as a partner, but it is recommended that you speak with an attorney about the legal and tax implications.
How do I dissolve a New York general partnership?
You can dissolve a New York general partnership by mutual agreement of all partners, completion of the partnership’s purpose, or legal action.
Do I need to file any paperwork to dissolve a New York general partnership?
No, you do not need to file any paperwork with the state of New York to dissolve a general partnership.
How are partnership profits taxed in New York?
In New York, partnership profits are taxed based on each partner’s share of the income.
Can partnerships in New York carry out activities other than those mentioned in their partnership agreement?
Yes, partnerships in New York can carry out supplementary activities, but they cannot distort the purpose of the partnership.
How do I change partnership accredited interests in New York?
Changes to partnership accredited interests require review of the partnership agreement and any relevant statutes or case law, as well as the consent of all partners.
Are partners personally responsible for any lawsuits against their New York general partnership?
Yes, each partner is personally responsible for all legal obligations of the partnership in New York.
Are general partnerships in New York required to have a written partnership agreement?
No, there is no legal obligation to create a written partnership agreement in New York, but it is recommended for regulatory compliances and intellectual property protection.
Can a partner withdraw their partner permission In-New York?
Yes, any partner so desire can conclude their participation with pay out of their fitted portion.
What is meant by the clean-up period in New York general partnership agreements?
The clean-up period is an extended or established purification month that engages dissolving the upcoming reason of litigation once the partnership has dissolved in New York.
How does partnership remuneration work in New York?
Partnership returns or profits in New York are usually punctual, equitable, coming soon and proportional to each partner’s percentage of interest in the partnership unless agreement provides otherwise.
How are closing, retirement and expulsion of New York general partnership obligations dealt with since last on-going business debts may arise?
Finalizing retirement/expulsion terms with the individual partners and liquidating the partnership assets to cover anyone still owed the old business debt is common in closing New York general partnership obligations.
Do New York general partnerships maintain business name registration of some sort?
Yes, register a New York assumed name or corporate name for the partnership, requires registering agreements with the Secretary of State so the assumed or corporate name protects, their ability to remedy wrong acts, corporates performance, or violation of third-party rights.
How is New York limited partnership classification preserved?
In New York, general partnerships may convert to a Limited partnership by filing a Certificate of Limited Partnership, Certificate of Registration, or, Amended Registration of foreign admit of soliciting investing, labor, services, or goods of enterprise in or outside New York State.
What is the percentage of the allocation of losses between partners in New York general partnerships?
Assignment of losses in a New York general partnership equally or negatively can be contingently according to partnership agreement.
Can partners designate multiple tasks for a particular process individually, like with a New York Buyer of Record?
Yes, partners of a New York general partnership may identify involving procuring services or goods like passing specifics of purchases to an intermediary and retaining decision-making capability with their settings or at their joint discretion.
Do General partnerships have ownership shares however it is classified in New York State?
Yes, just not split in ownership shares similar to their corporation, alternative limited liability structures with limited or unlimited partners available in-registration within New York State application.
Do I need to file any documents with the state to form a general partnership in New York?
No, you do not need to file any documents with the state to form a general partnership in New York.
Can general partners in a New York partnership be individuals, corporations, or other entities?
General partners in a New York partnership can be individuals, corporations, or other entities.
What are the advantages of forming a general partnership in New York?
The advantages of forming a general partnership in New York include shared decision making, shared management responsibility, and shared profits.
What are the liabilities of a general partnership in New York?
All partners have unlimited liability for the debts of the partnership.
Can I register a general partnership in New York?
No, New York does not require the registration of a general partnership.
Can a general partnership in New York have a limited partner?
Yes, a general partnership in New York can have a limited partner.
Is there a limit to the number of partners that can join a general partnership in New York?
No, there is no limit to the number of partners that can join a general partnership in New York.
Can a general partnership in New York own property?
Yes, a general partnership in New York can own property.
Can a general partnership in New York sue or be sued in their own name?
Yes, a general partnership in New York can sue or be sued in their own name.
How are taxes handled for a general partnership in New York?
A general partnership in New York is not a separate taxable entity. Instead, profits and losses are passed through to the partners, who report them on their individual tax returns.
Do I need to have a partnership agreement for my general partnership in New York?
While it is not required by state law, it is highly recommended that you have a partnership agreement for your general partnership in New York.
What should be included in a partnership agreement for a general partnership in New York?
A partnership agreement for a general partnership in New York should spell out the roles and responsibilities of each partner, the percentage of profits or losses split among the partners, and any procedures for handling disagreements or ending the partnership.
Can I change the partnership agreement for my general partnership in New York later on?
Yes, the partnership agreement for a general partnership in New York can be changed later on with the agreement of all partners.
How can I start a general partnership in New York?
To start a general partnership in New York, all that is needed is an oral or written agreement between partners to share in the profits and losses of the business.
What is the process for dissolving a general partnership in New York?
If one partner wants to dissolve the general partnership in New York, they will need to get the agreement of all other partners. If all parties agree, they can file a certificate of dissolution with the state.
Do I need to file any periodic reports with the state for my general partnership in New York?
No, New York does not currently require periodic reports to be filed for general partnerships.
Can a general partnership in New York engage in any business activity it wishes to?
Yes, a general partnership in New York can engage in any lawful business activity, subject to certain regulatory requirements and restrictions.
What about liability if one partner embezzles funds from the partnership in New York?
Each partner in a general partnership in New York is liable for the debts of the partnership, even if one partner engages in fraudulent activity.
What happens to a general partnership in New York if one partner passes away?
Generally, the partnership agreement for a general partnership in New York will spell out what happens if one partner passes away. However, the remaining partners will usually buy out the deceased partner’s interest or dissolve the partnership.
Do general partnerships in New York need to renew their partnership agreement on a regular basis?
There is no requirement for general partnerships in New York to renew their partnership agreement on a regular basis.
Can I be a silent partner in a general partnership in New York?
Yes, you can be a silent partner in a general partnership in New York. However, you may still have liability for the debts of the partnership.
Can a general partnership in New York borrow money?
Yes, a general partnership in New York can borrow money if necessary.
Who is responsible for filing taxes for a general partnership in New York?
Each partner is responsible for filing their own taxes for a general partnership in New York, as the partnership itself is not a taxable entity.
Can I be personally liable for any debts incurred by the general partnership in New York?
Yes, you can be personally liable for any debts incurred by the general partnership in New York.
What sort of partnerships can be formed in New York?
In addition to general partnership, New York also has limited partnership and limited liability partnership entities available.
Can I still be working for another employer while attending to a general partnership in New York?
Yes, you can still work for another employer while attending to a general partnership in New York.
Are there any mandatory annual reporting requirement for general partnership in New York?
No, there is no mandatory annual reporting requirement for general partnership in New York.

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Conclusion

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