Since a partnership has no protection of personal property, each partner can be held personally liable for all debts of the business. But here`s what`s worse: in a partnership, your personal liability isn`t necessarily a 50/50 split, you assume half of the debt and your partner assumes the other. Your liability could actually be up to 100%. In fact, because of this problem, many people consider the general partnership to be the riskiest type of business – even more so than a sole proprietorship. At least with a sole proprietorship, you have no one to blame but yourself if your business goes bankrupt. Again, these reasons vary in relevance to your business, depending on your type of legal entity, the type of business you`re in, and your growth strategies. We strongly recommend that you speak to your accountant or lawyer to determine if DBA registration is the right choice for your business. In the case of a sole proprietorship or partnership, this legal name is the name of the owner(s) of the business. In the case of a corporation, limited liability company (LLC) or other legal entity, the legal name is the one that appears on its certificate of incorporation (for example, articles of incorporation or articles of incorporation). All formal business entities (including LLCs, corporations, etc.) must maintain a registered agent in each state in which they operate.
A registered agent is a physical or commercial entity that receives deliveries of important documents from the State, informs the company of the receipt, and forwards the documents to the company. However, open partnerships are not required to appoint or maintain a registered agent, saving them money and hassle compared to formal business entities. Company name. When a corporation is incorporated, it must register a corporate name. If you don`t want to operate your business as an intermediate unit (meaning the profits of the business go through the partnership itself and the owners pay taxes on their personal earnings), consider starting a different type of business. Once you`ve secured your EIN, it`s time to get a bank account for your new business. This is another very simple step, as all you have to do is bring your EIN to the bank of your choice and ask them to open an account for your business. You`ll almost certainly need an EIN or DBA to maintain your business bank account, and the bank may also request a copy of your partnership agreement. As for general partnership naming conventions, we have already explained the standard way to combine partner names. The other option is to register a DBA (Doing Business As) name, which you can use to create an assumed business name for your partnership. It must be remembered that the name of a partnership is simply the combination of the personal names of its owners. If you wish, you can file a DBA and get an adopted trade name of your choice, but many states do not offer exclusivity for DBA names.
When you form an LLC or corporation, you get guaranteed exclusive rights to the name of the company you have chosen. Registering and conducting business under a DBA name is not the same as setting up a company or business entity. If you register a DBA without first holding yourself out as an LLC, corporation, or other legal entity, the state in which you do business recognizes your business as a sole proprietorship. For the vast majority of our readers, we strongly recommend forming an LLC instead of sticking to the formalities of an open partnership. The LLC not only provides protection for personal property, but also gives your business a touch of credibility that a partnership cannot achieve. Before choosing a name for your partnership, do a search on the Uspto.gov website to make sure your business name is not a registered trademark and is available. As a sole proprietor, you can legally do business in that state under your fictitious business name, but you don`t have limited liability protection. This means that you are responsible for the company`s debts and obligations. As with any other business entity, the partnership has advantages and disadvantages.
While it`s incredibly easy to mold and maintain, the lack of personal wealth protection is a major drawback. Partnership owners are considered independent persons under U.S. Business Tax Law. That means each owner has to pay the 15.3 percent self-employment tax, which includes the employer and employee`s shares in Medicare and Social Security. This tax is in addition to your income tax, not as a substitute. There are no legal requirements for owning a partnership. You don`t need to tell the state that owns your company unless you enter a DBA name, integrate your company or perform other similar business functions. Trade name. A trade name is the name by which the business is commonly known to the public, which may or may not match the legal name of the owner.
Frank Farmer`s Fridges and Cold Stream Guard Services are examples of trade names. Business names can be seen wherever the business presents itself to the public, such as on commercial signs or in the telephone directory. For many transactions, such as opening a bank account or applying for a loan, the legal name of the company and its business name must be provided. Do you still want to stay as a partnership? If so, you should purchase general liability insurance for your business. General liability insurance will help you cover costs caused by mistakes made in the operation of your business. The first thing to understand about general partnerships is that they are not formal business units.