Sometimes choosing between two or more choices doesn’t take a lot of thought process. For example, you only have to think about taste when picking between vanilla and chocolate ice cream. But what about selecting a house or a boat or a business entity? Most people consider every available choice before making a decision. When it comes to choosing the right type of Minnesota partnership, you need to look at specifics.
But, first, a few general facts about Minnesota partnerships.
General Requirements for Minnesota Partnerships
A partnership is a business owned by two or more people. Note that a partnership is not a corporate entity. Under Minnesota state law, partnerships must have the following characteristics:
- “Each partner shares equally in the right, and responsibility, to manage the business
- Each partner is responsible for all the debts and obligations of the business.”
All partnerships need:
- federal and state ID numbers,
- an unemployment insurance employer account number.
Most partnerships need to register their business name. However, this is unnecessary if the first and last name of each partner appears in the name of the partnership.
Some partnerships need to obtain at least one business license.
Finally, it’s best to have a well-crafted formalization of the partnership in the form of a partnership agreement.
Specific Types of Partnership
The Minnesota Department of Employment and Economic Development lists two types of partnership:
- Limited Partnership. Liability for individual partners should not exceed the amount of their investment. This type of Minnesota partnership has at least one general partner who controls the partnership and shoulders responsibility for liabilities and debts. In addition, the partnership contains at least one limited partner who lacks the power to act on behalf of the partnership.
- Limited Liability Partnership. A general partnership has the option of registering as a limited liability partnership (LLP). This business structure protects personal assets of the partners against certain partnership liabilities.
- Limited Liability Limited Partnership. In Minnesota, a limited partnership can elect limited liability status on its certificate of limited partnership. Then, both limited partnership and general partners have limited liability protection.
Call to Learn More About Choosing the Right Minnesota Partnerships
Are you currently operating a Minnesota partnership? Are you thinking of forming a partnership? Either way, talk to people who know the Minnesota business community.
At Virtus Law, we have the experience and skills to analyze your current business and make any necessary changes. Contact us by calling 612.888.1000 or by emailing us at info@virtuslaw.com. Our main office is in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.