How to Create a General Partnership in Minnesota: A Beginner’s Guide


Steve Goldstein
Steve Goldstein
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Steve Goldstein runs LLCBuddy, helping entrepreneurs set up their LLCs easily. He offers clear guides, articles, and FAQs to simplify the process. His team keeps everything accurate and current, focusing on state rules, registered agents, and compliance. Steve’s passion for helping businesses grow makes LLCBuddy a go-to resource for starting and managing an LLC.

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Create a General Partnership in Minnesota

Forming a general partnership in Minnesota can be a great way to combine your skills, resources, and ideas to create a thriving business. In Minnesota, also known as The North Star State, general partnerships are relatively easy to establish, making them an attractive option for entrepreneurs who want to keep things simple and cost-effective.

This article will guide you through the essential steps to start a general partnership in Minnesota. From understanding the legal requirements and drafting a partnership agreement to registering your partnership and obtaining necessary permits, we’ll provide you with the necessary tools and insights to help you launch your business venture. Whether you’re opening a boutique retail store or a cutting-edge tech startup, this comprehensive guide will help you navigate the process of starting a general partnership in Minnesota.

What is General Partnership In Minnesota

It is a business structure where two or more people come together to form a jointly owned business. In the general partnership business, the partners agree upon sharing assets, responsibilities, profits, and liabilities (legal & financial). In a general partnership, Partners consent to carry potentially unlimited liability personally. Liabilities are not restricted as they would be, for example, in a limited liability partnership (LLP) or a limited liability company (LLC) structure. Unlike the LLCs, a partner, in this case, can be legally sued for any business debts, and a possibility of seizure of personal assets can occur.

Before you start setting up your general partnership, it is advised that you consult a legal person. They will know what is best for you and your business. You can always form an LLC instead of a general partnership to protect your personal assets from business debts.

LLCBuddy Editorial Team

How to Create a General Partnership in Minnesota

To create a general partnership in Minnesota, you must follow the guidelines below: forming a business name, making a partnership agreement, requesting an EIN, getting a license and permit, getting a state-based tax ID, and opening a bank account.

Step 1: Choose a Business Name in Minnesota

Naming your business is one of the most crucial activities during the startup phase. Your general partnership name is the foundation for your brand in Minnesota and is what clients use to connect you to the products or services you offer. Legal procedures should be taken into account when choosing your partnership name. Choose a business name that will enable you to develop a strong brand identity without being hampered by irrelevant factors.

If you want to set up an LLC, there is a complete guide on Minnesota LLC name guidelines for a proper business name. Here are some guidelines you must follow while naming your general partnership-

  • Name availability: The name should be available, and no other entity should have the same name in Minnesota.
  • Trademarks
  • Limit of restricted words that need a license in Minnesota

In Minnesota, if you register your general partnership business with the Minnesota Secretary of State, then the name you choose will be the company’s official name. On the contrary, unregistered general partnership businesses use the last name of all of their partners by default. For instance, if Selena Gomez and Hailey Beiber enter business together, the partnership name is “Gomez & Bieber” by default if unregistered. However, if you would like to form a business name under something more appropriate, such as “EJI Design and Build,” then you’ll need to file a “Doing Business As (DBA)” name with Minnesota SOS.

In Minnesota, if you do not wish to file your general partnership business right away but want to hold the name that you have decided on, then you can reserve your business name for 1 year. You must file a name reservation application with the SOS to keep the name.

Step 2: Make a Partnership Agreement

After you have chosen a business name for your general partnership, the next step would be making a partnership agreement in Minnesota. A partnership agreement is a legal contract that specifies how a for-profit company would operate when run by two or more people.

The partnership agreement specifies each partner’s roles within the company, their ownership stakes, and their share of profits and losses. Additionally, it discusses business management guidelines and potential contingencies that may arise, such as a partner’s passing or a partner’s decision to leave the partnership. A partnership agreement should include the following:

  • Name of Partners
  • The principal address of the partnership
  • Purpose of the partnership
  • Terms of the partnership
  • Partnership start date and end date (if not for infinite time)
  • Partnership dissolution terms (for finite partnership)
  • Capital contribution of partners
  • Share of Interest of Partners
  • Profit distribution of partners (equal distribution by default, if not specifies any special condition)
  • Salary distribution (if applicable)
  • Partnership Management Terms
  • Terms of Partnership Sale

These key factors must be considered when forming or creating a partnership agreement in Minnesota. In this way, all business partners will understand what this is about and how to proceed if the mentioned scenarios happen in Minnesota.

Without a Partnership Agreement, your company will often be subject to the general partnership default laws of Minnesota. The default laws in Minnesota might not be appropriate for your requirements. Hence, it is important to have a transparent agreement while forming a partnership.

Step 3: Request an EIN in Minnesota

After documenting the partnership agreement, you should get or request an Employer Identification Number (EIN). An EIN will serve as the tax ID for your general partnership. EIN can be obtained from the Internal Revenue Service (IRS). It is a 9-digit number similar to Social Security Number. EIN, however, is distinct from SSN. It is only used for business-related activities, particularly for submitting general taxes. The form must be completed and uploaded to the IRS website. Getting EIN is necessary whether you are opening an LLC in Minnesota, or a general partnership, or something else.

The application of an EIN in Minnesota can be through the following:

  • Apply Online- You can apply for EIN online, which is the most desirable and fastest method for users.
  • Apply by Fax- Another method of obtaining EIN is to fax Form SS-4 (PDF) after entering all the correct information to (855) 641-6935.
  • Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is 4 weeks.
  • Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.

After you have your EIN number, you can benefit in several ways. It will provide your general partnership with the final advantage necessary to operate fully without encountering legal or judicial issues. For more details about EIN for your business, you may check why you need EIN.

Step 4: License and Permit for General Partnership in Minnesota

Before your general partnership business operates in Minnesota, you must have a business license first. A business license is a document issued by a government agency that permits you to operate your business in the geographic region that that agency governs.

To legally operate your partnership, you must apply for a business license to Minnesota Secretary of State. In some states, you might need to obtain a Privilege License. Based on the business structure, you might need it. In Minnesota, partnership businesses do not need to get to obtain a privilege license. You might even need more than one license in Minnesota. Numerous general partnership licenses need to be filed and renewed regularly.

Step 5: Obtain Minnesota Tax ID Number

In Minnesota, to conduct a business, you must comply with the Minnesota Department of Revenue. If you have a general partnership in Minnesota, you must obtain the Minnesota Tax ID number from Minnesota Department of Revenue. Your partnership business must pay state taxes (if applicable).

Step 6: Open a Bank Account

Once you have filed and received your general partnership license, you should now open a bank account since you will use this account for yourself, your clients, and your employees.

Your business dealings in Minnesota might be simpler with a US business bank account because it boosts your company’s legitimacy and liquidity. Most banks demand an EIN for creating a business bank account for firms other than sole proprietorships. Also, keeping separate finances helps you avoid combining personal and professional finances.

Example of General Partnership in Minnesota

Individuals looking to collaborate and numerous kinds of service providers have chosen general partnerships as their preferred business entity. That’s frequently because of its simple design, low price, and simplicity of setup. Some general partnership examples include:

  • Providing professional services (architectural firms, medical clinics, etc.)
  • Selling goods at retail
  • Opening a restaurant
  • Business Consulting

General partnerships are also formed by partners who are spouses or other family members who want to operate a business together.

Important Information

Maintaining Business License in Minnesota

Now that you have established your general partnership, you must maintain or renew your business license every now and then. Make time to check the status of your licenses at least once per year. Then, you can keep from missing anything significant. If there are any issues, you can address them.

Paying your Taxes in Minnesota

Even if you have established your general partnership in Minnesota, pay your taxes and keep everything up to date so you won’t pay any penalty. Minnesota tax information will help you with what to pay before or during the operation of your professional corporation. You must check with Minnesota Department of Revenue for more details.

Advantages of General Partnership in Minnesota

  • Foundation only requires two people: Forming a general partnership doesn’t need many people to operate. You can form a general partnership with a partner in mind and a business plan. It can be a group of friends or colleagues, a family member, or a spouse and wife partnership.
  • Equal Rights: Everyone is granted equal rights when a business is founded using a general partnership; each partner is free to express their ideas and choose what is best for the company’s success.
  • Management Option: One of the advantages of joining a general partnership is the opportunity to select the finest management options for the company. For this reason, large partnerships should draft an agreement describing each partner’s responsibilities inside the business. As a result, each partner’s leadership abilities are enhanced.
  • Flexibility: General Partnership is the basic form of a business structure since it can be converted into any business entity, such as LLC. If you have flexibility in applying for an LLC in Minnesota, you will have default rules set by law, and you need to have an operating agreement for this.
  • Pass-through taxation: The pass-through tax structure will make the general partnership business not pay twice the tax. Due to this structure, most start-ups and entrepreneurs in Minnesota apply for a GP or LLC. And one of the main advantages of a general partnership is that partners don’t have to pay for the losses collectively.

FAQs

What is a General Partnership in Minnesota?
A General Partnership in Minnesota is a business entity that is formed by two or more people who agree to work together to operate a business and share in the profits and losses of the business.
How do I form a General Partnership in Minnesota?
To form a General Partnership in Minnesota, you need to file a Certificate of Partnership with the Secretary of State. You must also create a Partnership Agreement, which outlines the rights and responsibilities of each partner.
Are there any special laws in Minnesota related to General Partnerships?
Yes, Minnesota has laws that apply specifically to General Partnerships. These laws include the Minnesota Uniform Partnership Act (MUPA), which sets out the rights and obligations of General Partnerships in Minnesota.
What are the tax requirements for a General Partnership in Minnesota?
A General Partnership in Minnesota is not a separate legal entity for tax purposes. The General Partnership must file a partnership tax return (Form 1065) with the Internal Revenue Service and each partner must report their share of the income/losses on their individual tax returns.
Does a General Partnership in Minnesota need to register with the state?
Yes, a General Partnership in Minnesota must register with the Minnesota Secretary of State in order to operate legally in the state.
Does a General Partnership in Minnesota have to have a registered office in the state?
Yes, a General Partnership in Minnesota must have a registered office in the state. This is the address where legal documents will be sent and served.
How is a General Partnership in Minnesota managed?
A General Partnership in Minnesota is managed by the partners themselves, who must agree on all major decisions. If there is a disagreement between the partners, a majority vote usually wins.
Are the partners in a General Partnership in Minnesota liable for the debts of the business?
Yes, the partners in a General Partnership in Minnesota are personally liable for the debts of the business. This means that the partners may be held responsible for debts even if they did not personally incur them.
What is the difference between a General Partnership and a Limited Partnership in Minnesota?
A General Partnership in Minnesota is a business entity owned and managed by two or more people, while a Limited Partnership in Minnesota is a business entity owned by two or more people, with one or more of the owners acting as limited partners who are not involved in the management or control of the business.
What is a general partnership in Minnesota?
A general partnership in Minnesota is a business structure in which two or more people share ownership of a business. The partners, who are usually owners, manage the business and share any profits and losses.
What are the benefits of forming a general partnership in Minnesota?
Forming a general partnership in Minnesota offers several potential benefits, including pass-through taxation, liability protection, and simplified formation procedures.
How do I form a general partnership in Minnesota?
In order to form a general partnership in Minnesota, you must first choose a name for your partnership, file a partnership certificate with the Minnesota Secretary of State’s office, and create a partnership agreement that outlines the business structure and the each partner’s respective roles and responsibilities.
What is the filing fee for a general partnership in Minnesota?
The filing fee for a general partnership in Minnesota is $135.
What information does a partnership certificate for a general partnership in Minnesota include?
A partnership certificate for a general partnership in Minnesota must include the name of the partnership, the address of the partnership’s principal office, the names and addresses of each partner, and the date of the partnership’s formation.
Are there any special rules for general partnerships in Minnesota?
Yes, there are special rules for general partnerships in Minnesota. These include a requirement that the partners be at least 18 years of age, and that the partnership must have at least two partners.
Are there any restrictions on the types of business activities that a general partnership in Minnesota can engage in?
No, there are no restrictions on the types of business activities that a general partnership in Minnesota can engage in.
Are there any restrictions on how profits and losses are distributed in a general partnership in Minnesota?
Yes, in a general partnership in Minnesota, profits and losses must be distributed among the partners in proportion to their ownership interests.
What are the tax implications of forming a general partnership in Minnesota?
A general partnership in Minnesota is typically subject to pass-through taxation, which means that profits and losses are passed through to the individual partners and taxed on their personal income tax returns.
Who is liable for the debts and obligations of a general partnership in Minnesota?
In a general partnership in Minnesota, all of the partners are jointly and severally liable for the debts and obligations of the partnership.
Is a general partnership in Minnesota required to register with the Minnesota Department of Revenue?
Yes, a general partnership in Minnesota is required to register with the Minnesota Department of Revenue in order to obtain a Minnesota Tax Identification Number.
Is a general partnership in Minnesota required to obtain a Minnesota business license?
Depending on the type of business activities that the partnership is engaging in, it may be required to obtain a Minnesota business license.
Is a general partnership in Minnesota required to file an annual report?
Yes, a general partnership in Minnesota is required to file an annual report with the Minnesota Secretary of State’s office.
Does a general partnership in Minnesota need to have an Operating Agreement?
Yes, a general partnership in Minnesota should have an Operating Agreement that outlines the business structure and the each partner’s respective roles and responsibilities.
Does a general partnership in Minnesota need to have a Partnership Agreement?
Yes, a general partnership in Minnesota should have a Partnership Agreement that outlines the business structure and the each partner’s respective roles and responsibilities.
Does a general partnership in Minnesota need to have a written Partnership Agreement to be valid?
No, a general partnership in Minnesota does not need to have a written Partnership Agreement to be valid. However, a written agreement is strongly recommended in order to protect the interests of all parties involved.
Is a general partnership in Minnesota required to have an EIN?
Yes, a general partnership in Minnesota is required to have an Employer Identification Number (EIN) in order to open a bank account, file taxes, and engage in other business activities.
Are there any special filing requirements for a general partnership in Minnesota?
Yes, a general partnership in Minnesota may be required to file certain forms with the Minnesota Secretary of State’s office, such as a Partnership Certificate and an Annual Report.
Are there any restrictions on the name of a general partnership in Minnesota?
Yes, a general partnership in Minnesota must have a unique name that is not already in use by another business entity in the state.
Is a general partnership in Minnesota required to have a physical address in the state?
Yes, a general partnership in Minnesota must have a physical address in the state in order to register with the Minnesota Secretary of State’s office.
Is a general partnership in Minnesota required to keep records of its business activities?
Yes, a general partnership in Minnesota is required to keep records of its business activities, including financial records, tax returns, and any other documents related to the business.
Can a general partnership in Minnesota issue stock?
No, a general partnership in Minnesota cannot issue stock.
Does a general partnership in Minnesota need to have insurance?
Yes, a general partnership in Minnesota should have insurance in order to protect the partners from potential liability.
Are there any restrictions on foreign ownership of a general partnership in Minnesota?
No, there are no restrictions on foreign ownership of a general partnership in Minnesota.
Can a general partnership in Minnesota sue or be sued?
Yes, a general partnership in Minnesota can sue or be sued.

Also Read

Why Create General Partnership Minnesota is So Important

One of the primary reasons why creating a general partnership in Minnesota is so important is the ease of formation. Unlike other types of business entities, such as corporations or limited liability companies, general partnerships do not require extensive paperwork or legal formalities to establish. Partners can simply come together and agree to work towards a common goal, sharing both the responsibilities and profits of the business equally. This simplicity in formation allows partners to quickly start their venture and begin operating without unnecessary delays or expenses.

Furthermore, general partnerships in Minnesota offer flexibility in terms of management and decision-making. In a general partnership, each partner has an equal say in the operation of the business, allowing for a collaborative and democratic approach to decision-making. This can be advantageous for partners who have different skill sets, expertise, or resources to contribute to the business. By pooling their strengths and working together, partners can leverage their individual abilities to achieve greater success and growth for the partnership.

Additionally, creating a general partnership in Minnesota provides partners with personal liability protection. While each partner is personally responsible for the debts and obligations of the business, they are also able to share in the profits and losses incurred. This shared risk can help partners feel more secure in their decision to enter into a business partnership, knowing that they are not solely responsible for the financial liabilities of the business.

Another important aspect of forming a general partnership in Minnesota is the tax benefits it offers. General partnerships are considered “pass-through” entities, meaning that the profits and losses of the business are passed through to the individual partners and reported on their personal tax returns. This can result in potential tax savings for partners, as they may be able to deduct business expenses and losses from their personal income, reducing their overall tax liability.

In conclusion, creating a general partnership in Minnesota is a crucial step for individuals or entities looking to collaborate and do business together. The simplicity in formation, flexibility in management, personal liability protection, and tax benefits make general partnerships an attractive option for partners seeking to combine their skills, resources, and expertise to achieve success. By entering into a general partnership, partners can establish a strong foundation for their business relationship and pave the way for future growth and prosperity.

Conclusion

In conclusion, starting a general partnership in Minnesota may effectively combine resources, expertise, and creativity to achieve your mutual business goals. By understanding the legal requirements, drafting a thorough partnership agreement, and registering your partnership, you’ll be well on your way to a successful collaboration. As you embark on this exciting journey, remember to maintain open communication and stay committed to the shared vision that inspired your partnership in the first place.

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