Partnership Agreements Attorney
While written partnership agreements are not mandated by law, you are strongly urged to create one prior to opening your doors for business. While you may have a positive relationship with your fellow partners and clients now, you never know what sorts of legal issues you may be confronted with in the future. If a conflict or uncertainty ever arises, you will want to be able to refer to back to the provisions of your written agreement. If you base your partnership on a verbal agreement and a handshake, your legal recourse will be limited should a partnership dispute or breach of contract ever take place.
The knowledgeable legal team at Bellatrix PC has extensive experience helping all types of partnerships select their legal structures, register with the state of California, prepare clear and detailed partnership agreements and client contracts, and negotiate effectively through conflicts. Whether you need an aggressive litigator to represent you in a dispute over liability, or you simply need advice on getting your partnership started, our business attorneys are here to assist you.
To discuss your business’ needs in a confidential legal consultation, call the law offices of Bellatrix PC at (800) 449-8992 today.
Should You Structure Your Business Entity as a GP, LP, or LLP?
Prior to beginning the registration process, you must determine whether your partnership will be structured as a general partnership (GP), a limited partnership (LP), or a limited liability partnership (LLP). The business formation lawyers of Bellatrix PC can help you make an informed decision.
General partners share equal liability and participate equally in the management of daily business operations. In an LP, the general partner assumes greater managerial control and a greater share of liability than the limited partner. In an LLP, multiple partners enjoy limited liability. However, only certain types of businesses may be structured as LLPs, including accounting firms, law firms, and architecture firms.
Your partnership entity selection will impact not only the business registration process, but even more importantly, all matters of liability, profit distribution, and management responsibility going forward as set forth in your partnership agreement. It is critically important to consult with an experienced business law attorney when making this decision, as your entity selection will serve as the foundation upon which every aspect of your company rests.
Steps to Registering a Partnership in California
The steps to the process of registering your partnership depend on the type of partnership you select, as described below:
- General Partnership
- Filing a Statement of Partnership Authority (GP-1) with the Secretary of State is optional, but recommended. The GP-1 “specifies the authority, or limitations on the authority, of some or all of the partners to enter into transactions on behalf of the partnership and any other matter.” The GP-1 is a short, simple form that will ask you for information like your address and the partners’ contact information.
- Once your GP-1 is received, it will be reviewed by the Secretary of State’s Office to make sure there are no compliance issues.
- If there are no compliance problems, your GP-1 will be filed.
- You will receive a copy of your GP-1 for your records, as well as a Certificate of Registration.
- Limited Partnership
- Domestic LP – You must file a Certificate of Limited Partnership (Secretary of State Form LP-1). This is not optional.
- Foreign LP – You must file a Foreign Limited Partnership Application for Registration (Secretary of State Form LP-5). The subsequent review process is similar to the process for general partnerships described above.
- Limited Liability Partnership
- You must file a Registered Limited Liability Partnership Registration (Secretary of State Form LLP-1).
- If you are seeking malpractice liability coverage, you must prove your net worth by filing a Limited Liability Partnership Alternative Security Provision transmittal form (Secretary of State Form LLP-3). This form must be accompanied by a $30 filing fee and a $15 service fee for a total of $45.
- Your registration forms will be reviewed for compliance. Assuming there are no issues, your forms will be filed, and you will receive a copy of your LLP-1 as well as a Certificate of Registration.
Note that all registration forms must be accompanied by a filing fee. The filing fee is the same for GPs, LPs, and LLPs.
What Should a Partnership Agreement Contain?
Countless web sources supply pre-made partnership agreements which use generic boilerplate language. While these templates may seem like the simplest and most convenient option for getting started, they generally cause more harm than they prevent as they inevitably fail to make provisions for the nuances of any given business transaction or relationship. When crafting your partnership agreement, you should always consult with an experienced business lawyer, such as those of Bellatrix PC. Only your attorney will be able to prepare a detailed, personalized, and comprehensive contract which is structured to protect your best interests.
That being said, there are some key components which are common to most partnership agreements, regardless of the type of business the partnership is engaged in. Generally speaking, your agreement should include provisions outlining the following elements:
- Decision-making authority, profit division, and the distribution of partner liability.
- How much capital each partner is expected to contribute to the business.
- What sorts of equipment and resources will be included in the partnership’s property.
- How financial matters will be handled, such as tax liability and bank accounts for the business.
- How the business should be sold or dissolved if the partners wish to part ways or end the partnership.
- What will happen if a partner dies or becomes disabled.
If you’re thinking about starting a partnership in California, or if you need assistance preparing a partnership agreement, the business law lawyers of Bellatrix PC can help. We have years of experience providing general counsel and business risk reviews for GPs, LPs, and LLPs, and are well-versed in the nuances of state and federal law governing partner liability, tax obligations, management duties, insurance coverage, property and asset division, and other aspects of partnerships. We are also prepared to assist with business dissolution or sale of business.
To learn more about how Bellatrix PC can help your partnership get started or resolve a dispute, call our law offices at (800) 449-8992 to arrange for a private consultation.