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What legal steps do I need to take when forming a partnership in California?

Picture of Chris Battis By   ·  1 minute read

To form a partnership in California, there are several legal steps that need to be taken. Here are some of the key requirements:

  1. Choose a Business Name: The partners must choose a name for their partnership that complies with California law. The name must not be already taken by another business in the state, and it must include the words "limited partnership" or "LP" to indicate that it is a partnership.
  2. File a Statement of Partnership Authority: The partners are required to file a Statement of Partnership Authority with the California Secretary of State's office. This document lists the names and addresses of all partners, and identifies which partners have the authority to make decisions and sign contracts on behalf of the partnership.
  3. File a Certificate of Limited Partnership: If the partnership is a limited partnership, the partners must file a Certificate of Limited Partnership with the Secretary of State. This document provides more detailed information about the partnership, including the names and addresses of all partners and the nature of their contributions.
  4. Obtain Necessary Licenses and Permits: Depending on the nature of the partnership's business activities, it may be necessary to obtain various licenses or permits from state or local government agencies, such as a business license or tax permit.
  5. Draft and Sign a Partnership Agreement: Although not required by law, it is strongly recommended that the partners draft and sign a partnership agreement that outlines the terms of their partnership. This document should include information such as how profits and losses will be shared, how decisions will be made, and how disputes will be resolved.

It is important to note that forming a partnership in California may have tax and liability implications, and it is recommended that the partners consult with a qualified attorney and tax professional to ensure that they fully understand these issues. Additionally, Partnerships in California are registered and regulated by the California Secretary of State according to state law. Any updates or changes made to the partnership’s statement of authority must be filed with the California Secretary of State.