What are the legal requirements for forming a partnership?
In Massachusetts, forming a partnership requires legal compliance with general business statutes and partnership law. The basic legal steps for forming a partnership include: (1) choosing a business structure; (2) selecting a business name; (3) registering with the state; (4) creating a partnership agreement; (5) obtaining any necessary licenses and permits; and (6) filing taxes. For the initial step of choosing a business structure, the partners must decide if the business should be a general or limited partnership. A general partnership is created when two or more people agree to combine resources to operate a business; no formal paperwork is required, although partners should consider drafting a partnership agreement. Limited partnerships are a more complex arrangement, as their participants (general and limited partners) have different levels of liability. Therefore, they must file an application for Certificate of Limited Partnership with the state. When selecting a business name, partners in Massachusetts must ensure that it is not already in use by another business in the state. The Secretary of the Commonwealth’s Corporations Division can provide a searchable database to verify name availability. Partners must then register their business with the state by filing a Statement of Partnership Authority with the Corporations Division, which indicates the formation of a general or limited partnership. Partners should also create a written agreement establishing the rights and responsibilities of each partner, such as their contributions to the business and how profits will be distributed. Massachusetts requires some businesses to obtain licensure or permits to operate, such as food-service establishments or service providers. Finally, the business must register for and file the appropriate taxes with the MA Department of Revenue. Complying with all of these legal requirements will ensure that the partnership is properly formed in Massachusetts.
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