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


Steve Bennett
Steve Bennett
Business Formation Expert
Steve 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.

All Posts by Steve →
Business Formation Expert  |   Fact Checked by Editorial Staff
Last updated: 
LLCBuddy™ offers informative content for educational purposes only, not as a substitute for professional legal or tax advice. We may earn commissions if you use the services we recommend on this site.
At LLCBuddy, we don't just offer information; we provide a curated experience backed by extensive research and expertise. Led by Steve, a seasoned expert in the LLC formation sector, our platform is built on years of hands-on experience and a deep understanding of the nuances involved in establishing and running an LLC. We've navigated the intricacies of the industry, sifted through the complexities, and packaged our knowledge into a comprehensive, user-friendly guide. Our commitment is to empower you with reliable, up-to-date, and actionable insights, ensuring you make informed decisions. With LLCBuddy, you're not just getting a tutorial; you're gaining a trustworthy partner for your entrepreneurial journey.
Create a General Partnership in Rhode Island

Forming a general partnership in Rhode Island can be a great way to combine your skills, resources, and ideas to create a thriving business. In Rhode Island, also known as The Ocean 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 Rhode Island. 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 Rhode Island.

What is General Partnership In Rhode Island

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 Rhode Island

To create a general partnership in Rhode Island, 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 Rhode Island

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 Rhode Island 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 Rhode Island 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 Rhode Island.
  • Trademarks
  • Limit of restricted words that need a license in Rhode Island

In Rhode Island, if you register your general partnership business with the Rhode Island 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 Rhode Island SOS.

In Rhode Island, 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 120 days. 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 Rhode Island. 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 Rhode Island. In this way, all business partners will understand what this is about and how to proceed if the mentioned scenarios happen in Rhode Island.

Without a Partnership Agreement, your company will often be subject to the general partnership default laws of Rhode Island. The default laws in Rhode Island 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 Rhode Island

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 Rhode Island, or a general partnership, or something else.

The application of an EIN in Rhode Island 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 Rhode Island

Before your general partnership business operates in Rhode Island, 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 Rhode Island Department of State. In some states, you might need to obtain a Privilege License. Based on the business structure, you might need it. In Rhode Island, partnership businesses do not need to get to obtain a privilege license. You might even need more than one license in Rhode Island. Numerous general partnership licenses need to be filed and renewed regularly.

Step 5: Obtain Rhode Island Tax ID Number

In Rhode Island, to conduct a business, you must comply with the Rhode Island Division of Taxation. If you have a general partnership in Rhode Island, you must obtain the Rhode Island Tax ID number from Rhode Island Division of Taxation. 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 Rhode Island 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 Rhode Island

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 Rhode Island

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 Rhode Island

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

Advantages of General Partnership in Rhode Island

  • 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 Rhode Island, 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 Rhode Island 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 Rhode Island?
A general partnership in Rhode Island is an unincorporated business with two or more partners who share ownership and responsibilities.
What are the requirements for forming a General Partnership in Rhode Island?
In Rhode Island, the requirements for forming a general partnership are similar to those of other states, including filing a partnership certificate with the Secretary of State and registering the business with the Rhode Island Department of Taxation.
What is the filing fee for a General Partnership in Rhode Island?
The filing fee for a General Partnership in Rhode Island is $59.
Is a General Partnership in Rhode Island required to have a registered agent?
Yes, a General Partnership in Rhode Island is required to have a registered agent who is responsible for receiving service of process.
What laws govern a General Partnership in Rhode Island?
The laws governing a General Partnership in Rhode Island are outlined in the Rhode Island Revised Statutes Title 7 – Partnerships.
Is a General Partnership in Rhode Island required to pay taxes?
Yes, a General Partnership in Rhode Island is required to pay the state income tax and the Rhode Island corporate excise tax.
Is a General Partnership in Rhode Island required to have a business license?
Yes, a General Partnership in Rhode Island is required to have a business license in order to operate within the state.
Is a General Partnership in Rhode Island required to file annual reports?
Yes, a General Partnership in Rhode Island is required to file annual reports with the Rhode Island Department of State.
Can a General Partnership in Rhode Island enter into contracts?
Yes, a General Partnership in Rhode Island can enter into contracts with other parties.
Are General Partnerships in Rhode Island subject to self-employment tax?
Yes, General Partnerships in Rhode Island are subject to self-employment tax.
How does a General Partnership in Rhode Island dissolve?
A General Partnership in Rhode Island can be dissolved voluntarily by the partners or involuntarily by court order.
What is the statute of limitations for a General Partnership in Rhode Island?
The statute of limitations for a General Partnership in Rhode Island is six years.
Is a General Partnership in Rhode Island required to have articles of partnership?
Yes, a General Partnership in Rhode Island is required to have articles of partnership.
Can a General Partnership in Rhode Island own real estate?
Yes, a General Partnership in Rhode Island can own real estate.
Is a General Partnership in Rhode Island subject to federal income tax?
Yes, a General Partnership in Rhode Island is subject to federal income tax.
Does a General Partnership in Rhode Island need to register with the Secretary of State?
Yes, a General Partnership in Rhode Island needs to register with the Secretary of State.
Does a General Partnership in Rhode Island need to register with the Department of Taxation?
Yes, a General Partnership in Rhode Island needs to register with the Department of Taxation.
Does a General Partnership in Rhode Island need to file an annual report?
Yes, a General Partnership in Rhode Island needs to file an annual report with the Department of State.
Is a General Partnership in Rhode Island responsible for paying employee taxes?
Yes, a General Partnership in Rhode Island is responsible for paying taxes on its employees.
Can a General Partnership in Rhode Island issue stock?
No, a General Partnership in Rhode Island cannot issue stock.
Can a General Partnership in Rhode Island sue or be sued?
Yes, a General Partnership in Rhode Island can sue or be sued.
What is the penalty for failure to file an annual report for a General Partnership in Rhode Island?
The penalty for failure to file an annual report for a General Partnership in Rhode Island is a penalty of $50.
Is a General Partnership in Rhode Island liable for the debts of the other partners?
Yes, a General Partnership in Rhode Island is liable for the debts of the other partners.
Is a General Partnership in Rhode Island subject to capital gains tax?
Yes, a General Partnership in Rhode Island is subject to capital gains tax.
How does a General Partnership in Rhode Island distribute profits?
A General Partnership in Rhode Island distributes profits in accordance with the partnership agreement.
Does a General Partnership in Rhode Island need to obtain an Employer Identification Number (EIN)?
Yes, a General Partnership in Rhode Island needs to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
Does a General Partnership in Rhode Island need to obtain a business license?
Yes, a General Partnership in Rhode Island needs to obtain a business license in order to operate within the state.
Is the personal liability of a General Partner in Rhode Island limited?
Yes, the personal liability of a General Partner in Rhode Island is limited to the amount of their investment in the partnership.
Does a General Partnership in Rhode Island need to keep records?
Yes, a General Partnership in Rhode Island needs to keep records of all transactions.
Does a General Partnership in Rhode Island need to pay estimated taxes?
Yes, a General Partnership in Rhode Island is required to pay estimated taxes.
Does a General Partnership in Rhode Island need to obtain a surety bond?
It depends, a General Partnership in Rhode Island may need to obtain a surety bond depending on the type of business it is operating.

Also Read

Why Create General Partnership Rhode Island is So Important

First and foremost, a general partnership allows for collaboration and shared decision-making between partners. When starting a business, having a partner can be extremely beneficial as it allows for different skill sets, resources, and perspectives to come together to create a successful venture. By creating a general partnership, partners can work together towards a common goal and share the risks and rewards that come with entrepreneurship.

Additionally, forming a general partnership can make it easier to secure financing for your business. Banks and investors often view partnerships as a more stable and reliable business structure, as the risk is shared among multiple partners. This can make it easier to secure loans, lines of credit, or other sources of funding to help grow your business.

Furthermore, creating a general partnership in Rhode Island can also provide tax benefits for partners. Partnerships are pass-through entities, meaning that the business itself does not pay taxes. Instead, profits and losses are passed through to the individual partners, who report them on their personal tax returns. This can result in potential tax savings for partners, especially when compared to other business structures like corporations.

Another important reason to create a general partnership in Rhode Island is the flexibility it provides for partners. General partnerships are relatively easy to set up and maintain, with fewer legal formalities and regulatory requirements than other business structures. This allows partners to focus on running their business and growing their venture, rather than getting bogged down in paperwork and administrative tasks.

In addition, creating a general partnership can help protect each partner’s personal assets in the event of a lawsuit or other legal action against the business. While partners are still personally liable for the debts and obligations of the partnership, creating a formal legal entity can help shield personal assets from being used to satisfy business debts.

Overall, creating a general partnership in Rhode Island is important for entrepreneurs and business owners looking to start a new venture. By forming a partnership, individuals can leverage their combined skills and resources, secure financing more easily, benefit from tax advantages, enjoy greater flexibility, and protect their personal assets. Whether you are looking to start a small business with a friend or colleague, or are seeking to expand an existing business with a new partner, forming a general partnership in Rhode Island can be a smart and strategic decision.

Conclusion

In conclusion, starting a general partnership in Rhode Island 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.

Leave a Comment