By Christine Mathias , Attorney Penn State Dickinson School of Law
Updated by Amanda Hayes , Attorney University of North Carolina School of Law
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A partnership (also known as a "general partnership") is an informal business structure consisting of two or more people. You don't have to file paperwork to form a partnership—you create a partnership when you agree to go into business with another person. While you can form a partnership without formally filing or registering the entity, partnerships must comply with licensing and tax requirements that apply to all businesses. In addition, every partnership can benefit from a partnership agreement and business insurance. Let's look at the five steps you must generally follow to form a partnership.
In most states, partnerships can use either the last names of the individual partners or a trade name (also known as a "fictitious business name," an "assumed name, " or a "DBA"). If you plan to use a trade name, it can't be the same as or too similar to any name that's already registered with the state.
For example, suppose Joey Potter and Dawson Leery want to open a seafood restaurant called "Capeside Core Four Eats." But there's already another seafood restaurant a few blocks away called "Capeside's Four Core Eatery." Because Joey and Dawson's restaurant would have a very similar name to the restaurant that already exists, they should probably choose a different name.
Before you land on a business name, you should make sure it's available for you to use. For example, you can search the following state databases for registered business names:
Apart from business names that are registered with the state, you should look at trademarks that have been registered at the state and federal levels. Just like you can't use a registered business name, you usually can't use a registered trademark.
Search the United States Patent and Trademark Office (USPTO) trademark database. The database, called "TESS," has a record of all trademarks that have been registered or applied for with the USPTO. If you have a business name that's very similar to another trademark in the TESS database and the goods or services you want to sell are related to the ones sold under that trademark, then you should consider choosing another name.
Consider talking to a trademark attorney about the business name you're considering. They can help you perform a trademark search and advise you on the strengths and weaknesses of your proposed name. If you find a name that's available to use, you should also consider federally registering your mark—a trademark lawyer can help with that as well.
For tips on choosing a unique and legally compliant business name, check out our FAQ on choosing a business name.
You can't use a trade name to sell your services or goods until you fulfill your state and local registration requirements. Typically, you must file a name registration with the state or at the clerk's office in your city or county.
When registering your trade name, you might be required to publish a notice in a local newspaper—your local agency will likely provide a list of approved publications. After the required time for publication (typically around 4 weeks), you must notify the licensing agency that you fulfilled the publication requirement.
Check with your state and city governments for specific requirements.
If you use a business name that's different from the last names of the individual partners, Florida requires you to register the trade name. In Florida, a trade name is known as a "fictitious business name" (FBN). You must register your FBN with the Division of Corporations before you open for business. (Fla. Stat. § 865.09 (2023).)
You can complete and mail an Application for Registration of Fictitious Name to register your FBN. You can also register online using the FL Fictitious Name Registration.
You'll need to publish the FBN in a newspaper in the county where you'll be located. You'll certify that you've published the notice when you apply for your FBN.
As of 2023, the filing fee is $50. You must renew your registration every five years.
If you use a business name that's different from the legal names of the individual partners, New York requires you to register the trade name. New York refers to a trade name as an "assumed business name." You must file a certificate of assumed name—often called a "business certificate"— with the county clerk's office in the county where your business is located. (N.Y. Gen. Bus. Law § 130 (2023).)
The appropriate form for filing an assumed business name in New York is available from your county clerk's office. The filing fee varies by county. Contact your county clerk's office for more information, including the appropriate form and filing fee.
If you use a business name that's different from the last names or other legal names of the individual partners, Texas requires you to register the trade name. You'll need to submit an assumed name certificate to the county clerk's office in the county where your business is located. (Tex. Bus. & Com. Code §§ 71.001 and following (2023).)
Contact your county clerk's office for information about what form you should file and the associated filing fee. You'll probably need to renew your certificate every 10 years.
A partnership agreement isn't required to establish a partnership. However, having one is important to avoid misunderstandings between you and your partners. Even well-intentioned, honest partners can find themselves in a legal battle if they don't have a well-drafted partnership agreement.
Here's a list of some of the items that you should cover in your partnership agreement:
You can always revise your agreement at a later date should circumstances or conditions change. For help drafting your agreement, see our article on creating a partnership agreement.
Partnerships must meet the licensing and tax registration requirements that apply to any new business.
Employer identification number (EIN): The IRS requires every partnership to obtain an EIN, regardless of whether the partnership has employees. An EIN is a nine-digit number issued by the IRS for tax reporting purposes. You can register for an EIN for free at the IRS website.
Business licenses: Your business might need to obtain business or professional licenses depending on the type of business activity you're engaged in. For example, if your partnership offers accounting services, you must comply with state licensing requirements for accountants.
State tax registration: Depending on your state and your business activities, you might be required to report and pay taxes, such as sales tax and use tax. Check with your state's tax agency for more information and for registration.
Employer registration: If you plan on hiring employees, check the employer registration requirements in your state. In most states, you must pay unemployment and workers' compensation taxes. For more information about the steps you must take as a new employer, see our article on hiring your first employee.
In addition, local regulations—including licenses, building permits, and zoning clearances—might apply to your business. You'll need to check with your city and county governments for more information. For additional guidance, read our article about the legal requirements for starting a small business.
Let's look at some state-specific requirements and resources:
Because partners of a partnership are personally liable for all debts and obligations of the business, a general business liability insurance policy might be your only financial protection against unforeseen events. Having adequate business liability insurance can protect your business and personal assets if your business is sued.
Your state might require your business to have some forms of insurance, depending on your industry and number of employees. For example, New York requires employers to obtain workers' compensation insurance, but Texas doesn't. In Florida, construction businesses with one or more employees and non-construction businesses with four or more employees are required to have workers' comp insurance.
Additionally, if you use vehicles in your business, almost every state—including Florida, New York, and Texas—requires you to have auto insurance, usually commercial auto insurance.
To learn more about the different policies, read our article on what types of insurance your small business might need.
To learn more about partnerships (including the difference between a general partnership and a limited partnership), see our section on partnerships.
For information on your state's registration requirements, check out our state guide on starting a business.
If you have business experience and face simple legal requirements, you can probably start your partnership on your own. But if you and your partners have any disagreements over how your partnership should be run or you run into obstacles applying for local licenses and registrations, you should talk to a business attorney. They can help you draft a partnership agreement, apply for local licenses and permits, and comply with employment and tax laws.