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

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Create a General Partnership in Utah

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

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

Steps in Creating a General Partnership in Utah

What is General Partnership in Utah?

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

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

To create a general partnership in Utah, 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 Utah. 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 Utah 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 Utah with Utah Division of Corporations and Commercial Code.

Filing a DBA in Utah has three methods, online, by mail, and in person filing., which costs around $22. There is three years validity in renewing your DBA. 

In Utah, 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 Utah Division of Corporations and Commercial Code 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 Utah. 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 Utah. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Utah

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

In Utah, 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 Utah.

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

Pros and Cons of a General Partnership in Utah

In forming a general partnership in Utah, 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 Utah

  • 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 Utah

  • 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 Utah

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

Pay Your Taxes in Utah

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

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

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

FAQs

What is a general partnership in Utah?
A general partnership in Utah is a business arrangement where two or more people agree to share the profits and losses of a company.
Do I need to file any documentation to start a general partnership in Utah?
No, you don’t need to file any documentation to start a general partnership in Utah. However, it is recommended that you draft a partnership agreement to define the roles and responsibilities of each partner.
What is a partnership agreement, and should we have one?
A partnership agreement is a legally binding document that outlines the rights and responsibilities of each partner in a general partnership. It is highly recommended that you have one in place.
Can a general partnership in Utah be taxed as an S-corporation?
No, a general partnership in Utah cannot be taxed as an S-corporation. You may want to consider forming an LLC if you want the option to be taxed as an S-corporation.
Are there any residency requirements to start a general partnership in Utah?
No, there are no residency requirements to start a general partnership in Utah.
Do I need to have a specific amount of money to start a general partnership in Utah?
No, there is no specific amount of money required to start a general partnership in Utah.
Is a general partnership in Utah liable for its debts and obligations?
Yes, a general partnership in Utah is liable for its debts and obligations. Each partner is jointly and severally liable for the partnership’s debts.
Can I register my general partnership in Utah?
No, you cannot register your general partnership in Utah. However, you will still need to obtain any required business licenses and permits.
Do I need to have a business license to start a general partnership in Utah?
Yes, depending on your industry and location, you may need to obtain a business license to start a general partnership in Utah.
As a partner, do I need to contribute equal amounts of money and resources to the company?
No, partners do not have to contribute equal amounts of money and resources to the company. Partners can agree to split the costs and responsibilities in any way they see fit.
Can minors be a partner in my general partnership in Utah?
No, minors cannot legally enter into contractual agreements in Utah, including general partnerships.
Can my general partnership in Utah have a DBA (Doing Business As) name?
Yes, your general partnership in Utah can operate under a DBA name. However, you will still need to obtain the appropriate licenses and permits for the DBA name.
Can someone be part of multiple general partnerships in Utah?
Yes, someone can be a part of multiple general partnerships in Utah, as long as they can fulfill their obligations to each partnership.
What is the liability of a limited partner in a general partnership in Utah?
A limited partner in a general partnership in Utah has limited liability and is not personally liable for the partnership’s debts and obligations.
Can a general partnership be owned by a corporation?
Yes, a corporation can be a partner in a general partnership in Utah.
Can foreigners be partners in a general partnership in Utah?
Yes, foreigners can be partners in a general partnership in Utah.
Is it necessary to have an office address for a general partnership in Utah?
No, you do not necessarily need an office address for a general partnership in Utah. However, you should have a designated mailing address at which you can receive legal documents.
What is the process for dissolving a general partnership in Utah?
The process for dissolving a general partnership in Utah requires unanimous consent from all partners, and any necessary debts and obligations must be paid off before the partnership can be terminated.
Can a partnership agreement be amended after it has been signed?
Yes, a partnership agreement can be amended after it has been signed, as long as all partners are in agreement.
Can I assign my partnership interest in Utah?
Yes, you can assign your partnership interest in a general partnership in Utah, as long as all partners agree to the assignment.
Does Utah require general partnerships to have a registered agent?
No, Utah does not require general partnerships to have a registered agent. However, it is recommended for ease of communication and receiving legal documents.
Can a partner be removed from a general partnership?
Yes, a partner can be removed from a general partnership in Utah, as long as all partners agree to the removal.
Is a general partner personally liable for the torts of another partner or employee?
No, a general partner is not personally liable for the torts of another partner or employee.
Is an accountant or lawyer needed to start a general partnership in Utah?
No, an accountant or lawyer is not needed to start a general partnership in Utah, though it may be helpful to consult with one.
How long does it take to start a general partnership in Utah?
Starting a general partnership in Utah can take as little as one day, as long as you have a partner and any necessary business licenses and permits.
Can I have a silent partner in my general partnership in Utah?
Yes, you can have a silent partner in your general partnership in Utah who is not involved in the day-to-day operations of the company but contributes financially.
What is the maximum number of partners a general partnership in Utah can have?
There is no maximum number of partners for a general partnership in Utah.
Is the general partnership structure the best choice for every business in Utah?
No, the general partnership structure may not be the best choice for every business in Utah. You should consider consulting with a business advisor to help determine the best structure for your business.
Do I need to register my general partnership in Utah?
Yes, you need to file a registration statement with the Utah Division of Corporations and Commercial Code.
What do I need to include in my partnership agreement?
Your partnership agreement should include the names of the partners, the business name, the percentage of ownership, the division of profits and losses, the decision-making process, and the provisions for the dissolution of the partnership.
How much does it cost to register my general partnership in Utah?
The filing fee for a registration statement with the Utah Division of Corporations and Commercial Code is $70.
How long does it take to register my general partnership in Utah?
It takes approximately two to three weeks to process a registration statement with the Utah Division of Corporations and Commercial Code.
Can I operate my general partnership under a trade name in Utah?
Yes, you can operate your general partnership under a trade name in Utah, but you need to register that tradename with the Utah Division of Corporations and Commercial Code.
Can I change the business name of my general partnership in Utah?
Yes, you can change the business name of your general partnership in Utah, but you need to file an amendment to your registration statement with the Utah Division of Corporations and Commercial Code.
What type of tax do I need to pay for my general partnership in Utah?
General partnerships in Utah are not subject to state income taxes or corporate franchise taxes. The partners must report their share of the profits and losses on their individual income tax returns.
Do I need to get a business license for my general partnership in Utah?
In Utah, a general partnership needs to obtain a business license before operating a business in the state.
Can I form a general partnership with a non-Utah resident?
Yes, you can form a general partnership with a non-Utah resident, but you need to file a statement of foreign qualification with the Utah Division of Corporations and Commercial Code.
Can I dissolve my general partnership in Utah?
Yes, you can dissolve your general partnership in Utah, but you need to file a certificate of cancellation with the Utah Division of Corporations and Commercial Code.
Do I need to provide a registered agent for my general partnership in Utah?
Yes, you need to provide a registered agent for your general partnership in Utah, who will act as the contact person for legal and administrative purposes.
What happens to the debts of my general partnership if we dissolve the partnership in Utah?
The debts of a general partnership are the joint and several liabilities of the partners. When a general partnership dissolves in Utah, the partners must pay off the debts proportional to their ownership share and under the terms of the partnership agreement.
Can I have an uneven ownership split in my general partnership in Utah?
Yes, you can have an uneven ownership split in your general partnership in Utah, as long as it is reflected on your partnership agreement.
Does Utah impose any partnership accounting principles?
Utah does not impose specific partnership accounting principles, but partners should maintain accurate financial records of the partnership.
Can a general partnership be taxed as an S corporation in Utah?
No, a general partnership cannot be taxed as an S corporation in Utah. S corporations are formed as a separate legal entity and follow different tax laws than partnerships.
Do I need an attorney to form a general partnership in Utah?
No, you do not need an attorney to form a general partnership in Utah. However, it is advisable to consult with an attorney to review your partnership agreement and ensure compliance with Utah laws.
Can a general partnership in Utah be run by one partner?
Yes, a general partnership in Utah can be run by one partner, but they would be responsible for the entire business operation and liability.
What happens if a partner dies in a general partnership in Utah?
If a partner dies in a general partnership in Utah, the partnership must dissolve unless the partnership agreement has provisions for the continuation of the partnership or the transfer of the deceased partner’s share to their heir or estate.
Can a limited liability partnership convert to a general partnership in Utah?
Yes, a limited liability partnership can convert to a general partnership, but you need to file the appropriate forms with the Utah Division of Corporations and Commercial Code.
Can my general partnership in Utah buy or sell real estate?
Yes, a general partnership in Utah can buy or sell real estate, but it is essential to keep accurate financial and accounting records for these transactions.
Are there any restrictions on the ownership sharing in general partnerships in Utah?
There are no specific ownership sharing restrictions for general partnerships in Utah, as long as they comply with the terms of their partnership agreement.
Can general partnerships have employees in Utah?
The partners are jointly and severally responsible for any legal obligation, including wage and worker compensation claims, arising from the partnership’s operation.
Do general partnerships in Utah have perpetual existence?
No, general partnerships in Utah do not have perpetual existence, and they dissolve after the specific time frame stated in the partnership agreement or upon the agreement of all the partners.
Can a partner sell their ownership share in a general partnership in Utah?
Yes, a partner can sell their ownership share in a general partnership in Utah, but it is subject to the terms stated in the partnership agreement.
Can I change the ownership share percentage of a general partnership in Utah?
Yes, you can change the ownership share percentage of a general partnership in Utah, but it needs to be documented in an amendment to the partnership agreement.
What happens to the partnership’s assets if we dissolve the general partnership in Utah?
After settling the partnership’s liabilities, the remaining assets must be divided based on the partners’ ownership percentage, as stated in the partnership agreement.
Can general partnerships raise capital in Utah?
Yes, a general partnership in Utah can raise capital by bringing in new partners, accepting personal loans or mortgages, or creating credit lines with banks or other financial institutions.
Can a general partnership change its business purpose in Utah?
Yes, a general partnership can change its business purpose in Utah, but it requires an amendment to the partnership agreement and a notification to the Utah Division of Corporations and Commercial Code.

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Conclusion

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