If you’re thinking of starting a business in Florida, there are different legal structures to consider. Each structure has its own pros and cons. If you’re starting up a business with other people, though, you might want to consider forming a partnership.
Within our state, there are four different kinds of registered partnerships for business owners. Each one of those involves different tax choices and liability exposure. Regardless of which partnership you choose, there are 5 common legal steps involved in forming your Florida business partnership.
1. Choose a Name
Our state allows for partnerships to use the surnames of each partner or even a made-up business name. If you go the fictitious business name route, you need to ensure it’s completely unique. Aim to come up with a name that’s not even similar to any other registered business to avoid federal trademark law and common law protections.
You can run a search in engines such as the U.S. Patent & Trademark Office or the Florida Department of State to ensure your business name is unique and available.
2. File Your Trade Name
If you decide on a fictitious name for your company, state law requires you to register the trade name for a minimal filing fee. You’ll need to do this before you open for business. Trade name forms can be filed with the Florida Online Fictitious Name Registration or the Florida Department of State. The trade name must also be published in your county’s local newspaper.
3. Draw Up a Partnership Agreement
While a formal partnership agreement is a legal requirement for creating a partnership, it is an important step you need to take to ensure there is no vagueness between you and your partners. A properly drafted agreement helps you decide in advance how to handle different types of situations that may arise.
Important items you should cover in the agreement include:
- Voting rules for decisions
- Each partner’s contribution
- How to onboard new partners
- Each partner’s management duties and authority
- Allocations of draws, losses, and profits
- Dispute resolution
- Steps to take in the event of a partner’s death, withdrawal or bankruptcy
Even partners with the best of intentions can find themselves caught up in a legal battle if they don’t have a clear partnership agreement in writing. You can always amend your written agreement later on should anything change.
4. Get Your Permits, Licenses, and Zoning Clearance
Depending on the type of business activity you’ll be running, you may need to get certain licenses. In Florida, we have a complete database of every occupation requiring partnership licenses. There are a few professions like law and health care that are regulated by independent agencies, but if your business activity isn’t regulated by the Florida Department of Business and Professional Regulation, be sure to check the relevant Florida State Agency.
You may also have to apply for building permits, local regulations, and zoning clearances. Check with your local government to find out what you need to legally create your partnership and open your business.
5. Get Your Employer Identification Number
The IRS stipulates that partnerships must obtain an Employer Identification Number. This is a nine-digit number that you’ll use for the purpose of tax reporting. It doesn’t matter whether or not you have employees, you’ll need the number, but you can easily register for one online at the IRS’s website.
As a Florida-based business, you and your business partner must report taxes and file employee reports, if applicable. You might even need to use your Employer Identification Number when you register your business and report taxes to the Florida Department of Revenue. If you have staff, you’ll have to report and pay employment taxes, too. To do this, you must register through the Florida Department of Revenue e-Services.
If you’re ready to start a partnership, a legal professional can help you choose the right type of partnership for your business, file the paperwork, and help you find a registered agent.
Book a consultation at Principal Law Firm today for assistance with your new business partnership in Florida.
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