Form a Partnership in California
Everything you need to know about forming a Partnership in California. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Partnership Name
Select a business name that complies with California naming rules. For general partnerships, the name may be the partners' surnames; for limited partnerships, the name must include 'Limited Partnership' or 'LP' and must be distinguishable from existing California entities.
1-2 hours
Draft a Partnership Agreement
Although not legally required in California, a written partnership agreement is strongly recommended to define each partner's roles, profit and loss sharing, decision-making authority, and procedures for dissolving the partnership. California's Uniform Partnership Act (Corp. Code §16100 et seq.) governs partnerships without a written agreement.
2-5 hours
Designate a Registered Agent
Appoint a registered agent with a physical California street address to receive legal documents and official state correspondence on behalf of the partnership. The registered agent can be a partner or a professional registered agent service.
30 minutes
File Statement of Partnership Authority (Optional but Recommended)
File Form GP-1 (Statement of Partnership Authority) with the California Secretary of State to publicly establish the partnership's existence and authorize specific partners to act on behalf of the business. Submit online, by mail, or in person with the $70 filing fee.
30-60 minutes
What's Next After Filing
Once your Partnership is officially formed, you'll want to complete these important steps:
- •Obtain an EIN from the IRS — Apply for a Federal Employer Identification Number (EIN) from the IRS, which is required for opening a business bank account, hiring employees, and filing federal and state tax returns. This can be done free of charge on the IRS website.
- •Register with California Tax Authorities — Register with the California Franchise Tax Board (FTB) and, if applicable, the California Department of Tax and Fee Administration (CDTFA) for sales tax permits. Partnerships must file California Form 565 (Partnership Return of Income) annually with the FTB.
- •Obtain Required Business Licenses and Permits — Secure any local business licenses, zoning permits, and industry-specific state licenses required by the city, county, or state in which the partnership operates. Requirements vary significantly by location and industry in California.
Advantages
- ✓Simple and inexpensive to form — general partnerships do not require mandatory state registration to legally exist in California
- ✓No $800 annual minimum franchise tax obligation, unlike California LLCs and corporations, reducing ongoing overhead costs
- ✓Pass-through taxation allows partnership income and losses to flow directly to partners' personal tax returns, avoiding double taxation
- ✓Flexible management structure with no statutory requirements for formal meetings, minutes, or rigid governance procedures
Considerations
- •General partners have unlimited personal liability for business debts, obligations, and legal judgments, putting personal assets at risk
- •Minimum of two partners required, meaning a sole owner cannot form a partnership, and partner disputes can complicate business operations
- •Lack of perpetual existence — the partnership may dissolve upon the death, withdrawal, or bankruptcy of a general partner unless the agreement provides otherwise
- •Limited ability to raise investment capital compared to corporations, as partnerships cannot issue stock or equity shares to attract outside investors
Annual Obligations
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