Starting a General Partnership in Wisconsin 2024: A Comprehensive Guide

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How to Start a General Partnership in Wisconsin

One crucial decision you will need to make when starting a general partnership in Wisconsin is choosing the right legal structure. A general partnership is popular for many entrepreneurs due to its simplicity and flexibility. As a general partnership, you and your partners can share profits and losses, manage the business together, and avoid the costs and regulations associated with other business structures.

However, like starting an LLC in Wisconsin, forming a general partnership requires careful planning and attention to legal and regulatory requirements. This guide will provide the information you need to set up a general partnership in Wisconsin, including choosing a name, registering with the state, and obtaining necessary permits and licenses. At LLCBase, we understand that forming a general partnership can be an overwhelming experience, so we are here to help you every step of the way.

Start a General Partnership

What is a General Partnership

A general partnership is a business structure where two or more people share ownership and management responsibilities. In a general partnership, each partner contributes to the business and shares profits and losses. Unlike a limited liability company (LLC) or a corporation, a general partnership does not offer limited liability protection to its partners. Each partner can be personally liable for the business’s debts and obligations.

Why Start a General Partnership in Wisconsin

Starting a general partnership in Wisconsin is a simple and cost-effective way to structure a business, particularly for small enterprises or those with limited resources. General partnerships are relatively easy to set up and maintain, with fewer formalities than other business structures. They also offer more flexibility in management and decision-making, as partners can divide responsibilities and make decisions collectively.

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Start Wisconsin General Partnership: Step-by-Step

The following is a thorough guide on the steps to start a general partnership in Wisconsin:

Step 1: Choose a Business Name

The first step in starting a general partnership is choosing a business name in Wisconsin that reflects your brand. You should search the name through the Wisconsin Department of Financial Institutions‘s database to ensure that the name is not already used. Consider factors such as industry relevance, memorability, and potential trademark conflicts. Once you have chosen a name, you can reserve it for up to 120 days by submitting the required form and paying the name reservation fee.

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Step 2: Draft and Sign a Partnership Agreement

A partnership agreement is a crucial document that outlines the terms and conditions of the general partnership, including each partner’s responsibilities, profit-sharing arrangements, and procedures for resolving disputes. While not legally required in Wisconsin, it is highly recommended to draft and sign a partnership agreement to avoid potential misunderstandings and conflicts down the line. Consult with an attorney or utilize online legal services to create a comprehensive agreement that covers all aspects of your partnership, such as capital contributions, decision-making processes, and exit strategies.

Step 3: Get an EIN

An EIN, or Employer Identification Number, is a unique nine-digit number the Internal Revenue Service (IRS) assigns for tax purposes. You can obtain an EIN for your Wisconsin general partnership by applying online through the IRS website or via mail by submitting Form SS-4. This number will be used when filing taxes, securing licenses and permits, and opening a bank account for your business.

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Step 4: Secure Licenses and Permits

Depending on your specific industry and location, your Wisconsin general partnership may require certain licenses and permits to operate legally. These requirements vary greatly and may include professional licenses, zoning permits, and environmental permits. You can consult the Wisconsin Department of Financial Institutions for information on required licenses and permits for your business or use the U.S. Small Business Administration’s (SBA) guide to find relevant resources. Ensure all necessary documentation before starting operations to avoid penalties and fines.

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Step 5: Register for State and Local Taxes

Your Wisconsin general partnership may be subject to various state and local taxes, such as payroll tax,  income tax, and sales tax permit in Wisconsin. Register with the Wisconsin Department of Revenue to ensure proper tax compliance and reporting. Additionally, consult with a tax professional or accountant to understand your tax obligations and the best strategies for minimizing your tax burden.

Step 6: Open a Bank Account

Finally, you should open a separate bank account for your Wisconsin general partnership to separate your personal and business finances. This will make it easier to manage your business’s finances and maintain accurate records for tax purposes. When opening a business bank account, consider factors such as account fees, transaction limits, and access to credit. Research various financial institutions to find the best fit for your partnership’s needs and provide the required documentation to open the account, such as your EIN, partnership agreement, and business licenses.

By following these step-by-step guidelines, you can successfully establish your Wisconsin general partnership and set your business on the path to success. Remember to stay compliant with all state and federal regulations and consult with professionals when necessary to ensure the smooth operation of your partnership.

Fees for Starting a General Partnership in Wisconsin

Here are the fees associated when starting a general partnership in Wisconsin:

  • Name Reservation Fee: When reserving a business name for your Wisconsin general partnership, you may be required to pay a name reservation fee of $15 online or $15 mail. The fee varies by state, so it is essential to check with the Wisconsin Secretary of State‘s office for the specific amount.
  • Filing Fees: Although general partnerships are not required to register with the Wisconsin Secretary of State, some states may require you to file a statement of partnership authority or similar documentation. A filing fee may be associated with this process, which could be around $170 (by mail and $130 online). Again, consult the Secretary of State’s office for specific details and fees.
  • Licenses and Permits: Depending on the nature of your general partnership’s business, you may need to obtain various Wisconsin business licenses and permits to operate legally in Wisconsin. These can include professional licenses, zoning permits, and environmental permits. Fees for these licenses and permits vary depending on the requirements and the issuing agency. Contact the Wisconsin Department of Revenue for more information about the necessary licenses and permits and their associated fees.
  • Employer Identification Number (EIN): Obtaining an EIN for your Wisconsin general partnership is free through the Internal Revenue Service (IRS) website. However, if you use a third-party service to obtain your EIN, they may charge a fee for their assistance.
  • Partnership Agreement: While not legally required, drafting and signing a partnership agreement is highly recommended for Wisconsin general partnerships. You may consult an attorney to help draft this agreement, which can result in legal fees. Alternatively, you can use online legal services or templates to create a partnership agreement at a lower cost.
  • Bank Account: Opening a bank account for your Wisconsin general partnership may involve fees, such as account maintenance fees or initial deposit requirements. Choose the best bank for your business in Wisconsin. Contact your chosen financial institution for information on their specific fees for business accounts.

Types of General Partnerships

Here are the four types of general partnerships in Wisconsin that you might want to consider:

  1. Professional General Partnership: A professional general partnership is formed by professionals, such as doctors, lawyers, engineers, or architects, who provide services within their respective fields. This type of partnership is ideal for individuals who want to combine their expertise and resources to offer specialized services to clients. A professional general partnership could be the right choice if your business involves a group of professionals working together.
  2. Family General Partnership: A family general partnership is formed by family members who pool their resources to start and manage a business together. This type of partnership is popular among families who want to keep their business operations within the family unit. A family general partnership may be the best option if you plan to start a business with your relatives.
  3. Investment General Partnership: An investment general partnership involves partners pooling their financial resources to invest in stocks, real estate, or other investment opportunities. This type of partnership suits individuals who want to work together to manage their investments and share profits and losses. If your primary objective is to invest together with others, consider forming an investment general partnership.
  4. Retail or Service General Partnership: Retail or service general partnerships are formed by individuals who want to start a retail store, restaurant, or other service-oriented businesses. In this type of partnership, the partners work together to manage the business’s day-to-day operations, share responsibilities, and split profits and losses. If you want to start a business in the retail or service sector with one or more partners, this type of general partnership could be a good fit.

Choosing the Right General Partnership

To choose the right type of general partnership in Wisconsin, consider the following factors:

  • Business objectives: Identify the primary goals of your business and choose a partnership type that aligns with those objectives.
  • Expertise: Assess the skills and expertise of each partner to determine which type of partnership would benefit from their combined knowledge and experience.
  • Liability: Understand the liability implications of each type of general partnership, as partners in a general partnership can be personally liable for the business’s debts and obligations.
  • Tax implications: Consult with a tax professional to understand the tax implications of each type of partnership and choose the one that offers the most favorable tax treatment for your situation.
  • Regulatory requirements: Research the specific regulatory requirements for your chosen partnership type in Wisconsin and ensure you comply with all necessary regulations.

Benefits of a General Partnership

Wisconsin general partnership offers several benefits, including:

  1. Ease of formation and management: General partnerships are relatively simple compared to corporations or limited liability companies (LLCs). A partnership is often formed automatically when two or more people engage in a business without formal documentation. However, it is recommended that partners create a written partnership agreement to outline the terms and conditions of their relationship and protect their interests in case of disputes.
  2. Flexibility in dividing responsibilities and decision-making among partners: General partnerships allow partners to decide how to manage the business, including dividing responsibilities and making important decisions. Each partner can contribute their unique skills and expertise to the operation.
  3. Pass-through taxation: One of the primary benefits of a general partnership in Wisconsin is pass-through taxation. This means that the partnership itself does not pay taxes on its income. Instead, profits and losses are reported on each partner’s tax return, avoiding the double taxation issue corporations face.
  4. Shared financial responsibility and resources: Partners in a general partnership can pool their financial resources to help fund the business’s start-up costs and ongoing expenses. This can be especially beneficial for small businesses that may not have access to other sources of financing, such as loans or investors.

However, consider that general partnerships do not provide the same level of liability protection as corporations or LLCs. Each partner is personally liable for the debts and obligations of the partnership, which means their personal assets could be at risk in case of legal issues or financial difficulties. Therefore, it is essential to weigh the benefits and risks of a general partnership before deciding on this business structure.

FAQs

What is a general partnership in Wisconsin?
A general partnership in Wisconsin is when two or more individuals or entities own a business together and share in the profits, management, and liability of the company.
How do I start a general partnership in Wisconsin?
To start a general partnership in Wisconsin, you must file a registration statement with the Wisconsin Department of Financial Institutions (DFI) and obtain any necessary licenses and permits.
What are the advantages of starting a general partnership in Wisconsin?
The advantages of starting a general partnership in Wisconsin include shared management responsibilities, tax advantages, and greater access to financing and resources.
What are the disadvantages of starting a general partnership in Wisconsin?
The disadvantages of starting a general partnership in Wisconsin include shared liability for business debts and obligations and the potential for disagreements or conflicts among partners.
What is the difference between a general partnership and a limited partnership in Wisconsin?
In a general partnership in Wisconsin, all partners share in the management, profits, and liability of the company. In a limited partnership, there are general partners who manage the company and limited partners who have limited liability and no management responsibilities.
How many partners are required to start a general partnership in Wisconsin?
A general partnership in Wisconsin requires at least two partners.
Are there any registration fees for starting a general partnership in Wisconsin?
Yes, there are registration fees for starting a general partnership in Wisconsin. These fees vary depending on the type of partnership and the number of partners.
Are there any annual filing requirements for a general partnership in Wisconsin?
Yes, all general partnerships in Wisconsin must file an annual statement with the Wisconsin Department of Financial Institutions, and pay a filing fee.
Can a general partnership in Wisconsin have employees?
Yes, a general partnership in Wisconsin can have employees. However, as with any business entity, the partnership must comply with various labor regulations and hiring requirements.
What types of businesses are best suited for a general partnership structure in Wisconsin?
Generally, businesses that are started by a team or group of owners who want to share in the management and profits of the company are well-suited for the general partnership structure in Wisconsin.
What is the process for filing a registration statement for a general partnership in Wisconsin?
The process for filing a registration statement for a general partnership in Wisconsin involves submitting the required forms, paying any registration fees, and obtaining any necessary licenses and permits.
Can a general partnership in Wisconsin sell stock or ownership shares to raise capital?
No, a general partnership in Wisconsin cannot sell stock or ownership shares like a corporation or limited liability company. Instead, partners must provide their own capital or seek investments from outside sources.
What types of businesses are not well-suited for a general partnership structure in Wisconsin?
Businesses that require a significant amount of capital investment and have a high degree of risk and liability are not well-suited for the general partnership structure in Wisconsin.
Can a general partnership in Wisconsin raise money through borrowing or loans?
Yes, a general partnership in Wisconsin can raise money through borrowing or loans, and the partnership is responsible for repaying any debts.
Can a general partnership in Wisconsin be run entirely by a managing partner?
Yes, a general partnership in Wisconsin can be run entirely by a managing partner if the partnership agreement allows for it.
What is the liability exposure for partners in a general partnership in Wisconsin?
Partners in a general partnership in Wisconsin have unlimited liability for the debts and obligations of the partnership.
What is the tax structure for a general partnership in Wisconsin?
In a general partnership in Wisconsin, income and losses are passed through to the individual partners’ tax returns and are taxed at their respective tax rates.
How can a general partnership in Wisconsin dissolve?
A general partnership in Wisconsin can dissolve by either mutual agreement of the partners or through involuntary dissolution by court order.
Are there any residency requirements for starting a general partnership in Wisconsin?
No, there are no residency requirements for starting a general partnership in Wisconsin.
Can a general partnership in Wisconsin convert to a different business structure in the future?
Yes, a general partnership in Wisconsin can be converted to a different business structure, such as a limited liability company or corporation, at any time in the future.
What are the requirements for filing an annual statement for a general partnership in Wisconsin?
The annual statement for a general partnership in Wisconsin must include the names and addresses of all partners, the business address, and a brief description of the business activities.
How can partners in a Wisconsin general partnership protect themselves from liability?
Partners in a Wisconsin general partnership can protect themselves from liability by obtaining liability insurance or forming a limited liability partnership or limited liability company.
Can a general partnership in Wisconsin retain earnings for future investment?
Yes, a general partnership in Wisconsin can retain earnings for future investment, however, these earnings are still subject to tax on the individual partner’s tax returns.
What is the duration of a general partnership in Wisconsin?
Unless stated otherwise in the partnership agreement, a general partnership in Wisconsin is typically presumed to have an indefinite duration.
Can a general partnership in Wisconsin have unequal profit-sharing among the partners?
Yes, a general partnership in Wisconsin can have unequal profit-sharing among the partners as long as this is specified in the partnership agreement.
Can partners in a general partnership in Wisconsin be personally liable for each other’s actions?
Yes, partners in a general partnership in Wisconsin can be personally liable for each other’s actions and debts incurred by the partnership.
What happens if a partner in a general partnership in Wisconsin dies?
If a partner in a general partnership in Wisconsin dies, the partnership may dissolve, unless the partnership agreement provides for the continuation of the partnership.
How is business income treated for Wisconsin income tax purposes?
Business income for Wisconsin income tax purposes is subject to tax at a rate of 7.65 percent for most entities, including general partnerships.
Can a general partnership in Wisconsin add or remove partners?
Yes, a general partnership in Wisconsin can add or remove partners, however, the partnership agreement may have specific requirements or procedures for doing so.
What information do I need to include in the Certificate of Partnership?
You will need to provide information about the names and addresses of all partners, the name and address of the business, and the duration of the partnership.
Do I need to register my general partnership with the state of Wisconsin?
Yes, you need to register your general partnership with the Wisconsin Department of Financial Institutions.
Can I start my general partnership online in Wisconsin?
Yes, you can file your Certificate of Partnership online through the Wisconsin Department of Financial Institutions’ website.
Is there a fee to register my general partnership in Wisconsin?
Yes, there is a filing fee to register your general partnership in Wisconsin.
How much is the filing fee to register a general partnership in Wisconsin?
The fee to file a Certificate of Partnership in Wisconsin is $70.
Do I need to obtain any licenses or permits to start a general partnership in Wisconsin?
The licenses and permits needed for your general partnership in Wisconsin will depend on the type of business you are operating.
Do I need to file for a tax ID number to start a general partnership in Wisconsin?
Yes, you need to obtain a tax ID number from the IRS for your general partnership in Wisconsin.
How do I obtain a tax ID number for my general partnership in Wisconsin?
You can apply for a tax ID number online through the IRS’ website.
Does Wisconsin recognize out-of-state general partnerships?
Yes, Wisconsin will recognize general partnerships formed in other states if they have complied with all state requirements.
Can I operate my general partnership with a different name in Wisconsin?
Yes, you can register a different name for your general partnership through the Wisconsin Department of Financial Institutions.
What is a registered agent, and do I need one for my general partnership in Wisconsin?
A registered agent is a person or service who receives legal correspondence on behalf of your business. Yes, you need a registered agent for your general partnership in Wisconsin.
Can I serve as my own registered agent for my general partnership in Wisconsin?
Yes, you can serve as your registered agent for your general partnership in Wisconsin.
How many partners can a general partnership have in Wisconsin?
A general partnership can have two or more partners in Wisconsin.
What are the personal liability implications for partners in a general partnership in Wisconsin?
Partners in a general partnership in Wisconsin have unlimited personal liability for the partnership’s debts and obligations.
How are profits and losses divided among partners in a general partnership in Wisconsin?
Profits and losses are divided evenly among the partners unless the partnership agreement states otherwise.
Can a general partnership continue if one partner leaves in Wisconsin?
Yes, a general partnership can continue if one partner leaves but must follow the partnership agreement’s terms.
Is a general partnership required to file annual reports in Wisconsin?
No, general partnerships in Wisconsin are not required to file annual reports.
How are the income taxes of a general partnership filing in Wisconsin structured?
Income taxes for general partnerships are filed as pass-through entities on the individual tax returns of each partner.
Can a general partnership convert to a different business structure in Wisconsin?
Yes, a general partnership can convert to another business structure in Wisconsin.
What are the most common reasons for general partnerships to be dissolved in Wisconsin?
The common reasons for a general partnership to be dissolved in Wisconsin are bankruptcy, death of a partner, or expiration of the terms agreed upon in the partnership agreement.
What happens to a general partnership’s assets when it is dissolved in Wisconsin?
When a general partnership is dissolved, the partnership’s assets are used to pay off debts and obligations.
Can a general partnership in Wisconsin authorize legal action against another entity?
Yes, a general partnership in Wisconsin can authorize legal action against another entity.
Can a general partnership in Wisconsin own property under its name?
Yes, a general partnership in Wisconsin can own property under its name.
Can individuals be partners in more than one general partnership in Wisconsin?
Yes, individuals can be partners in more than one general partnership in Wisconsin.
Can a general partnership in Wisconsin hire employees?
Yes, a general partnership in Wisconsin can hire employees.
What are the record-keeping requirements for a general partnership in Wisconsin?
A general partnership in Wisconsin must keep complete and accurate records of all financial transactions and earnings.
What happens if I fail to register my general partnership in Wisconsin?
If you fail to register your general partnership in Wisconsin, you may face penalties and lose your legal protections as a business entity.

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Conclusion

Starting a general partnership in Wisconsin is a straightforward process that offers numerous benefits for entrepreneurs. By following these steps and staying compliant with all necessary regulations, you can set your business up for success and join the ranks of thriving Wisconsin partnerships. Visit LLCBase for more information about starting a general partnership in Wisconsin.

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