Business Partnership Agreements in Virginia
Because Partnerships in Virginia are not registered with the state, they are similar to a Sole Proprietorship, except that Partnerships involve more than one person. Here are a few facts you should be aware of when starting a Partnership:
- If you start a business with someone on a handshake and don’t register the company with the state, you have a de facto General Partnership.
- Partnerships must register in the county or city where your business is located in order to do business there.
- Unless there is a written partnership agreement, the relationship among the partners is governed by the partnership laws within your state.
- When partners open a bank account or file federal tax returns, a separate employer identification number (EIN) from the IRS must be used to reference the company, even if they have no employees.
- Partners are “jointly and severally liable” for everything the company does. That meanseach partner is liable to the full extent of assets of the company plus their own personal assets. That liability extends to everything your partner or employees do. So if your partner thinks it is a good idea to buy an expensive car in the name of the partnership, you become personally liable to pay for that car. You can mitigate that risk by having enough insurance to cover all of your personal assets. Check with your insurance agent to be certain they are willing to cover the acts of your partner and employees in your liability policy.
The Argent Place Solution.
- Filings for the local licenses and Employer Identification Number (EIN).
- Create and protect internal processes that form the basis of your competitive advantage (your Intellectual Property).
- Draft a partnership agreement that governs the relationship between partners and largely supersedes the default laws governing the partnership.
- Draft and review the various kinds of contracts you will sign or create, including lease for space, contracts with vendors, a template contract for customers, letter offers of employment to prospective employees, and contracts with key employees.
- Careful consideration of the pros and cons of operating as a partnership for your specific needs
- Completion of a formal partnership agreement
- Accurate and timely filings of your necessary licenses
- Complete contracts and processes allowing for optimal business operation.