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

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Create a General Partnership in Wisconsin

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

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

Steps in Creating a General Partnership in Wisconsin

What is General Partnership in Wisconsin?

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

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

To create a general partnership in Wisconsin, 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 Wisconsin. 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 Wisconsin 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 Wisconsin with Wisconsin Department of Financial Institutions.

Filing a DBA in Wisconsin has two methods, by mail and in person., which costs around $15. There is ten years validity in renewing your DBA. 

In Wisconsin, 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 Wisconsin Department of Financial Institutions 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 Wisconsin. 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 Wisconsin. The default laws might not be appropriate for your requirements.

Step 3: Request an EIN in Wisconsin

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

In Wisconsin, 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 Wisconsin.

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

Pros and Cons of a General Partnership in Wisconsin

In forming a general partnership in Wisconsin, 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 Wisconsin

  • 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 Wisconsin

  • 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 Wisconsin

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

Pay Your Taxes in Wisconsin

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

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

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

FAQs

What is a general partnership in Wisconsin?
In Wisconsin, a general partnership is a business structure that involves two or more people working together to operate a for-profit business.
How do I form a general partnership in Wisconsin?
You can form a general partnership in Wisconsin by filing a registration statement with the Wisconsin Department of Financial Institutions.
What types of businesses can be a general partnership in Wisconsin?
Any business that two or more people want to operate together for profit can be a general partnership in Wisconsin, such as a restaurant, retail store, or landscaping company.
Do I need a partnership agreement to create a general partnership in Wisconsin?
It is recommended to have a partnership agreement to establish the responsibilities and compensation of each partner in a general partnership in Wisconsin, but it is not required.
What kind of information is needed to register a general partnership in Wisconsin?
To register a general partnership in Wisconsin, you will need to provide the business name, partner names and addresses, and a statement outlining your business activities.
How much does it cost to register a general partnership in Wisconsin?
The registration fee for a general partnership in Wisconsin is $70.
Can I change my business name after registering my general partnership in Wisconsin?
Yes, you can change your business name in Wisconsin by filing a Name Registration Application and paying a $15 fee.
Do I need to file annual reports for my general partnership in Wisconsin?
No, general partnerships in Wisconsin are not required to file annual reports.
What taxes does a general partnership in Wisconsin need to pay?
In Wisconsin, general partnerships do not pay state income taxes, but they do need to pay sales tax on their products or services.
How are profits and losses divided in a Wisconsin general partnership?
In Wisconsin, profits and losses are distributed to the partners according to the partnership agreement or in equal shares if no agreement is in place.
Can I decide to leave the general partnership in Wisconsin at any time?
Yes, partners in a Wisconsin general partnership can leave at any time unless the partnership agreement states otherwise.
Can my personal assets be seized to pay for debts of the general partnership in Wisconsin?
Yes, in a general partnership, partners are jointly and severally liable for the debts of the business, so personal assets can be seized to pay debts in Wisconsin.
Do I need a business license in Wisconsin to operate a general partnership?
The state of Wisconsin does not require a general license for general partnerships, but some cities or counties may require a local business license.
Do general partnerships in Wisconsin have to file for a fictitious name (DBA) when using a business name other than the partners’ names?
Yes, general partnerships in Wisconsin are required to file for a fictitious name if they use a name other than the partners’ names.
Are general partnerships in Wisconsin eligible for the Small Business Administration (SBA) loans?
Yes, general partnerships in Wisconsin are eligible for SBA loans, but they must meet specific qualifications and requirements.
How many partners can I have in a general partnership in Wisconsin?
A general partnership in Wisconsin can have two or more partners.
Can a general partnership in Wisconsin issue stocks?
No, general partnerships in Wisconsin do not have stocks since each partner has an equal share of ownership.
What happens if a partner dies or becomes incapacitated in a Wisconsin general partnership?
If a partner dies or becomes incapacitated in a general partnership, they must sell or transfer their interest in the partnership following the partnership agreement.
Can I hire employees for my Wisconsin general partnership?
Yes, general partnerships in Wisconsin can hire employees, but they need to register for unemployment insurance and workers’ compensation insurance.
Can partners in a Wisconsin general partnership be held liable for wrongful actions of other partners?
Yes, partners in a general partnership in Wisconsin can be held liable for the wrongful actions of other partners.
Can I convert my general partnership in Wisconsin to a different business structure like an LLC or corporation?
Yes, a general partnership in Wisconsin can convert to another business structure with proper documentation and approval.
What happens if one partner in a Wisconsin general partnership fails to contribute their agreed-upon share of work or capital?
In Wisconsin, if a partner fails to contribute their agreed-upon share, the partners can decide to continue the partnership and adjust responsibilities or dissolve the partnership altogether.
Can partners in a Wisconsin general partnership have different shares of ownership and decision-making abilities?
Yes, partners in a general partnership in Wisconsin can divide responsibilities and decision-making ability equally or differently based on the partnership agreement.
Is there a minimum duration for a general partnership in Wisconsin?
No, there is no minimum duration for a general partnership in Wisconsin.
What is the difference between a general partnership and a limited partnership in Wisconsin?
In a general partnership, all partners have equal responsibility and involvement in the business. In a limited partnership, some partners have limited involvement in the business or liability for the business’s actions.
Can I dissolve a Wisconsin general partnership at any time?
Yes, partners in a general partnership in Wisconsin can decide to dissolve the business at any time.
What happens to profits and assets in a Wisconsin general partnership if it dissolves?
In a Wisconsin general partnership, any profits, debts, and assets must be distributed among the partners following the partnership agreement.
Do I need to use an attorney to form a general partnership in Wisconsin?
It is not required to use an attorney to form a general partnership in Wisconsin, but it is recommended to seek legal advice before registering a general partnership.
How long does it usually take to register a general partnership in Wisconsin?
The processing time for registering a general partnership in Wisconsin typically takes three to five business days.
Are there any filing requirements to form a general partnership in Wisconsin?
No, there are no filing requirements to form a general partnership in Wisconsin.
Do I need a partnership agreement to form a general partnership in Wisconsin?
No, but it is highly recommended that you have a partnership agreement in place.
Can I register my general partnership in Wisconsin?
No, general partnerships are not registered in Wisconsin.
Can I operate a general partnership in Wisconsin under a different name?
Yes, you can operate under a trade name, but you must file a registration with the Wisconsin Department of Financial Institutions.
Do I need to obtain any licenses or permits to operate a general partnership in Wisconsin?
It depends on the nature of your business. You may need specific licenses or permits, depending on the type of business you conduct.
Can I be held personally liable for my partner’s actions in a general partnership in Wisconsin?
Yes, as a partner in a general partnership in Wisconsin, you can be held personally liable for your partner’s actions.
How are profits and losses distributed in a general partnership in Wisconsin?
In a general partnership in Wisconsin, profits and losses are typically divided according to the percentage of ownership each partner has in the business.
How do I dissolve a general partnership in Wisconsin?
You must file a statement of dissolution with the Wisconsin Department of Financial Institutions.
Are there any tax obligations for general partnerships in Wisconsin?
Yes, general partnerships in Wisconsin must file an annual information return with the IRS and pay self-employment tax.
Can I change my general partnership to a different business structure in Wisconsin?
Yes, you may change your business structure at any time.
Can my general partnership be held liable for damages caused by an employee?
Yes, as the employer of the employee, your general partnership can be held liable for damages caused in the course of employment.
How do I add a new partner to my general partnership in Wisconsin?
You must draft and sign a partnership agreement and file an amendment stating the addition of the new partner with the Wisconsin Department of Financial Institutions.
How do I remove a partner from the general partnership in Wisconsin?
You must follow the procedures outlined in your partnership agreement and file an amendment stating the removal of the partner with the Wisconsin Department of Financial Institutions.
Can one partner be held liable for damages caused by another partner in a general partnership in Wisconsin?
Yes, all partners can be held jointly and severally liable for damages caused in the course of business.
How is ownership in a general partnership in Wisconsin determined?
Ownership in a general partnership in Wisconsin is based on the percentage of capital contributed by each partner.
Can I have a silent partner in a general partnership in Wisconsin?
Yes, you can have a silent partner who is not actively involved in the business.
Can a general partnership in Wisconsin be sued?
Yes, a general partnership in Wisconsin can be sued.
Are there any restrictions on who can form a general partnership in Wisconsin?
No, anyone can form a general partnership in Wisconsin, regardless of residency or citizenship.
Do all partners in a general partnership in Wisconsin have equal say in business decisions?
It depends on the partnership agreement. Normally, partners have an equal say in business decisions.
What happens to the partnership if one partner dies or becomes incapacitated in Wisconsin?
The partnership is dissolved unless the partnership agreement specifically addresses the situation.
Can one partner be excluded from profits in a general partnership in Wisconsin?
Yes, the partnership agreement can specify the distribution of profits.
Are partners in a general partnership in Wisconsin employees?
No, partners in a general partnership in Wisconsin are classified as self-employed.
How is the partnership taxed in Wisconsin?
The partnership does not pay tax directly. Instead, the profits and losses are reported on the individual tax returns of the partners.
Can a partner in a general partnership in Wisconsin transfer ownership of their share of the business without the consent of the other partners?
It depends on the terms outlined in the partnership agreement.
Can a general partnership in Wisconsin own property?
Yes, a general partnership in Wisconsin can own property.
How are disputes between partners resolved in a general partnership in Wisconsin?
It depends on the terms outlined in the partnership agreement.
Can a person be a member of multiple general partnerships in Wisconsin?
Yes, a person can be a member of multiple general partnerships in Wisconsin.
What records must be kept by a general partnership in Wisconsin?
A general partnership in Wisconsin must keep accurate records of income, expenses, and any pertinent financial information for tax purposes.

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Conclusion

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