You form a partnership in New York City when you and another person (or persons) cooperate with time and capital to create a business but do not choose to form a corporation or an LLC. As with a sole proprietorship, you need to consider that you are still personally liable for business expenses. In addition, your partner(s) have "joint authority" in making business decisions. This means that any partner can bind the whole business to a contract (with the exception of selling the partnership, which requires approval from all partners). This raises the issue of "joint liability." In other words, any partner will be required to pay the full amount for any business debt.
To Do List:
File the forms and send them to your County Clerk's office
The Fee for registering the Form X-74 is $100 plus $10 for each certified copy.
Call your local County Clerk's Office to get most current information.
-Getting a Tax ID: Though it is possible to use your Social Security Number when you are a sole proprietor, generally businesses get a Tax ID. You may need a Tax ID for your business if you plan:
- Business Bank Account Once you register the business and get your Tax ID you can go to a bank and open a business checking account. This will help you separate your business and personal expenses.
- Retail Tax Autorization If required for your business you should obtain Retail sales tax Authorization this is also called a "Certificate of Authority"
- Obtain any licenses or permits your business may require.
Other Partnership Issues
Another consideration with a partnership is that if one of the partners wants to leave the company, all partners must fulfill all business obligations and divide the assets and profits amongst themselves before ending the partnership (you can avoid this problem with a buy/sell agreement).
Is a Partnership the Right Choice?
If you trust your business associates to make the right decisions, the partnership can be a simple and less expensive business structure to create and maintain in New York than an LLC or a corporation since the filing fee is less and you can save on accounting and legal costs.
Furthermore, the partnership itself does not pay taxes. Business income and losses are reported on the partners' personal income tax returns.
For more information on running your partnership proceed to the next section. Running your partnership