How to Create a General Partnership in North Dakota | A Complete Guide

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Create a General Partnership in North Dakota

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

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

Steps in Creating a General Partnership in North Dakota

What is General Partnership in North Dakota?

A general partnership in North Dakota 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 North Dakota Corporations or limited liability partnerships.

It is recommended that you consult to North Dakota 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 North Dakota 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: 

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 North Dakota

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

Filing a DBA in North Dakota has two methods, by mail and in person., which costs around $25. There is five years validity in renewing your DBA. 

In North Dakota, 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 1 year. You must file a name reservation application in the North Dakota 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 North Dakota. 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 North Dakota. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in North Dakota

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

In North Dakota, 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 North Dakota.

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 North Dakota 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 North Dakota, check out the Best Bank for North Dakota Small Business.

Pros and Cons of a General Partnership in North Dakota

In forming a general partnership in North Dakota, 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 North Dakota

  • 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 North Dakota

  • 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 North Dakota

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

Pay Your Taxes in North Dakota

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

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

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

FAQs

What is a general partnership in North Dakota?
A general partnership in North Dakota is a business structure where two or more individuals team up to run a business together.
How do I create a general partnership in North Dakota?
To create a general partnership in North Dakota, file a Certificate of General Partnership with the Secretary of State.
What information do I need to include when filing a Certificate of General Partnership in North Dakota?
You will need to include the name of your partnership, the names and addresses of the partners, and a registered agent for the partnership.
Are there any fees required to file a Certificate of General Partnership in North Dakota?
Yes, there is a filing fee that needs to be paid to the Secretary of State in order to file a Certificate of General Partnership in North Dakota.
Is there a minimum number of partners required to form a general partnership in North Dakota?
No, there is no minimum number of partners required to form a general partnership in North Dakota.
Is there a maximum number of partners allowed in a general partnership in North Dakota?
No, there is no limit on the number of partners allowed in a general partnership in North Dakota.
Can a non-resident of North Dakota be a partner in a general partnership formed in North Dakota?
Yes, a non-resident of North Dakota can be a partner in a general partnership formed in North Dakota.
Is a general partnership in North Dakota required to have a written partnership agreement?
While not required, it is recommended that a general partnership in North Dakota have a written partnership agreement to avoid any misunderstandings.
Are there any tax requirements for a general partnership in North Dakota?
Yes, a general partnership in North Dakota is required to file an annual partnership tax return with the state and the IRS.
Are the partners in a general partnership in North Dakota required to have a business license?
Depending on the nature of the business, the partners may need to obtain a business license from the state of North Dakota or local authorities.
Can a general partnership in North Dakota be converted into another business structure, such as an LLC or corporation?
Yes, a general partnership in North Dakota can be converted into another business structure at any time, provided all legal requirements are met.
Are the partners in a general partnership in North Dakota personally liable for the business’s debts and obligations?
Yes, the partners in a general partnership in North Dakota are personally liable for the business’s debts and obligations.
What happens to the general partnership in North Dakota if one partner withdraws from the business?
Typically, the general partnership in North Dakota will dissolve if one partner withdraws from the business, unless the partnership agreement specifies otherwise.
Can a partner in a general partnership in North Dakota assign his or her partnership interest to another person?
While technically possible, it is uncommon and requires the approval of all partners in the general partnership in North Dakota.
Are the partners in a general partnership in North Dakota entitled to equal profits and losses?
Under North Dakota law, the partners in a general partnership are entitled to share the profits and losses equally, unless otherwise specified in a partnership agreement.
Can a general partnership in North Dakota hold property in its name?
Yes, a general partnership in North Dakota can hold property in its name.
What happens to a general partnership in North Dakota if one of the partners die?
The general partnership in North Dakota does not automatically dissolve if a partner passes away, but the deceased partner’s interest in the partnership will need to be distributed according to his or her will or North Dakota law.
Can a partner in a general partnership in North Dakota be held liable for another partner’s misconduct?
Yes, under North Dakota law, one partner can be held liable for another partner’s misconduct in certain circumstances.
Can a partner in a general partnership in North Dakota be both a partner and an employee of the partnership?
Yes, a partner in a general partnership in North Dakota can also be an employee of the partnership.
What happens to a general partnership in North Dakota if it fails to pay its debts?
If a general partnership in North Dakota cannot pay its debts, the partners will be held personally liable and may need to file for bankruptcy to discharge the debts.
Can a general partnership in North Dakota operate under a different name than the partners’ names?
Yes, a general partnership in North Dakota can choose to operate under a trade name or fictitious business name.
Are general partnerships in North Dakota required to file annual reports with the state?
No, general partnerships in North Dakota are not required to file annual reports with the state.
Can I amend the partnership agreement of a general partnership in North Dakota after it has been established?
Yes, the partnership agreement of a general partnership in North Dakota can be amended at any time through agreement of the partners.
Are general partnerships in North Dakota subject to state and local taxes?
Yes, general partnerships in North Dakota are subject to state and local taxes on their income.
Can partners in a general partnership in North Dakota transfer their ownership interests to a third party?
Yes, but such a transfer requires prior approval by all partners and compliance with any applicable provisions in the partnership agreement.
Can a general partnership in North Dakota be sued by its creditors?
Yes, a general partnership in North Dakota can be sued by its creditors if it cannot pay its debts.
Can a partner in a general partnership in North Dakota be held personally liable for the partnership’s negligence?
Yes, under certain circumstances a partner in a general partnership in North Dakota can be held personally liable for the partnership’s negligence.
If I move out of state, can I still be a partner in a general partnership formed in North Dakota?
Yes, as long as the partnership agreement allows for it, you can still be a partner in a general partnership in North Dakota if you move out of state.
Is it mandatory to have a registered agent for a general partnership formed in North Dakota?
Yes, a registered agent is mandatory for a general partnership in North Dakota and they must reside in the state.
How do I choose a partner for my general partnership in North Dakota?
You should choose a partner who complements your skills, shares your goals, and whose values align with yours.
What are the benefits of a general partnership in North Dakota?
A general partnership allows for easy formation and administration, and provides flexibility in the sharing of profits, losses, and management duties.
What are the disadvantages of a general partnership in North Dakota?
The partners of a general partnership are personally liable for all the partnership’s debts and liabilities.
How do I register a general partnership in North Dakota?
You register a general partnership in North Dakota by filing the necessary forms with the Secretary of State.
What forms do I need to file to register a general partnership in North Dakota?
You need to file a Certificate of Partnership with the North Dakota Secretary of State.
Can I register my general partnership online in North Dakota?
Yes, you can register your general partnership online in North Dakota by using the Secretary of State’s online portal.
How much does it cost to register a general partnership in North Dakota?
It costs $50 to register a general partnership in North Dakota, plus an additional $5 for each partner beyond the first two.
What are the requirements for naming a general partnership in North Dakota?
The name of a general partnership in North Dakota must be unique and not already in use by another business.
Are there any other requirements for naming a general partnership in North Dakota?
The name of a general partnership in North Dakota must end with either “partnership,” “company,” or “associates.”
Can a general partnership in North Dakota have the same name as another business?
No, a general partnership in North Dakota cannot have the same name as another business.
Do I need to obtain any business licenses or permits in order to operate a general partnership in North Dakota?
Specific business licenses and permits might be needed to operate a general partnership in North Dakota, depending on your industry and location.
How do I file taxes for my general partnership in North Dakota?
You file taxes for your general partnership in North Dakota using Form E (The Partnership Income Tax Return).
How do I obtain a North Dakota sales tax permit for my general partnership?
You can obtain a North Dakota sales tax permit for your general partnership by registering with the State Tax Commissioner’s office.
Does North Dakota require a general partnership to have an operating agreement?
No, North Dakota does not require a general partnership to have an operating agreement, but it is advisable to have one.
What should be included in an operating agreement for a general partnership in North Dakota?
An operating agreement for a general partnership in North Dakota should include provisions on each partner’s duties and responsibilities, capital contributions, profit and loss distribution, decision-making processes, and dispute resolution mechanisms.
Can a general partnership in North Dakota be converted into a limited liability company (LLC)?
Yes, a general partnership in North Dakota can be converted into an LLC through a formal process that involves filing the necessary forms with the Secretary of State and obtaining necessary permits and licenses.
Can a general partnership in North Dakota have both general and limited partners?
Yes, a general partnership in North Dakota can have both general and limited partners.
What is the difference between a general partner and a limited partner in North Dakota?
General partners in North Dakota are responsible for the management and operations of the partnership and bear liability for its debts and obligations, whereas limited partners have limited liability and do not participate in its management.
Can a limited partner provide professional services to a general partnership?
Yes, a limited partner in North Dakota can provide professional services to a general partnership, but they lose their limited liability protections and become general partners in the event of a dispute, or under certain circumstances.
Can a general partnership in North Dakota have foreign partners?
Yes, a general partnership in North Dakota can have both US and foreign partners.
Does North Dakota offer any support or resources for new general partnerships?
Yes, North Dakota offers support and resources to new general partnerships through various state and local agencies.
What is the anticipated processing time for registering a general partnership in North Dakota?
The processing time for registering a general partnership in North Dakota is usually between five and ten days.
How do I renew my general partnership’s registration in North Dakota?
You can renew your general partnership’s registration in North Dakota online, by mail or in-person through the Secretary of State’s office.
Can I dissolve my general partnership in North Dakota?
Yes, you can dissolve your general partnership in North Dakota through a formal process that involves unanimously voting to wind up the partnership’s affairs, filing the necessary forms with the Secretary of State, and settling its debts and obligations.
Do North Dakota excise taxes extend to general partnership income?
No, North Dakota does not impose excise taxes on general partnership income.
Can a general partnership be sued in North Dakota?
Yes, a general partnership in North Dakota is a legal entity and can be sued in its own name. The partners may also be personally liable in the event of a lawsuit.
Can North Dakota residents form and register out of state partnerships?
Yes, North Dakota residents can form and register out of state partnerships, provided they meet the requirements outlined by the relevant state authorities and comply with North Dakota laws and regulations.
What are the annual filing requirements for general partnership registration in North Dakota?
In North Dakota, a general partnership must file a Statement of Change biennially; they should also update existing registration annually to mention any changes made to their business structure.

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Conclusion

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