How to Change a Sole Proprietorship to a Partnership When One Partner Is in a Different State

By John Cromwell

Where partners live is unimportant with regard to forming a partnership. While practical considerations will generally result in the business being headquartered where at least one of the partners lives, the partners are not legally required to locate their business in one state or another based on personal legal residence. Moreover, since a sole proprietorship has no formal filing requirements, you will not need to dissolve your business prior to starting the partnership. General partnerships are informal business organizations that require minimal formal governmental filings to form.

Step 1

Choose which state you want to headquarter the partnership. You need to choose a permanent headquarters so that jurisdiction can be established in case of a lawsuit between the partners. Select the state where you plan to conduct the majority of your business. The "majority of your business" is wherever your partnership makes the majority of its sales or primarily provides its services.

Step 2

Choose the name under which the partnership will operate. A partnership’s legal name is a list of the last names of the partners. If you wish to use another name, such as “A&E Consulting,” in most states you must register that name as a “doing business as.” Reasons to operate using a DBA include marketing and privacy considerations. How you register your partnership’s DBA depends on where the partnership is located, but generally you must apply to the county clerk where your partnership is headquartered or with the state government.

Ready to start your LLC? Start an LLC Online Now

Step 3

Research if your business will require any special licenses in the state where the business is headquartered. Most states require businesses to obtain a basic business license. Businesses that participate in specific industries may be required to obtain additional licenses. Contact your local chamber of commerce, county clerk or secretary of state to determine what licenses you require and the process for obtaining those licenses.

Step 4

Apply to the IRS for an employer identification number, or EIN. The easiest method for obtaining an EIN is by applying online through the IRS. The website will issue an EIN immediately. You can also apply by calling (800) 829-4333, and receive your partnership’s EIN over the phone.

Ready to start your LLC? Start an LLC Online Now
How do I Change an Existing Partnership to an LLC?
 

References

Resources

Related articles

How to Add DBA to an LLC

When registering a limited liability company, or LLC, with a state business registration entity, an individual must provide a legal name for the LLC. In addition to a legal name, an LLC may also have a fictitious business name. A fictitious business name, also referred to as a “trade name,” “DBA name” or assumed name, allows an LLC to use a name other than its legal name. By using fictitious business names, one LLC can be used to operate multiple businesses. While the method of registering a fictitious business name varies by state, it generally involves filing a fictitious business name registration with either a state or county agency.

How to Open a General Partnership in Florida

Florida law does not require general partnerships to register with the state or to obtain a state business license. General partnerships are not independent business entities, so each partner is individually responsible for any business-related activity in which the partnership may engage. Florida does provide general partnerships with the option to register with the state, however, and this registration can make it easier for a general partnership to present a business face to the public. State registration provides a public record of the general partnership's existence and allows the state to certify the partnership's standing if the partners are looking for a loan or engaging in other business that requires substantiation of business activity.

How to Convert a Sole Proprietorship to a Partnership in Maryland

In many cases, a business gets off the ground with the work of a single owner operating a sole proprietorship. As the company grows and becomes more profitable, additional owners often come into the picture, which can necessitate a restructuring of the business. In Maryland, new business registrations are handled by the Maryland Department of Assessments and Taxation. However, by law, neither sole proprietorships nor partnerships are required to register. Instead, the conversion process is handled through internal partnership agreements and by amending any existing licenses to include the names of the new owners.

LLCs, Corporations, Patents, Attorney Help LLCs

Related articles

Do General Partnerships Require a DBA?

DBA, or doing business as, occurs when a business operates under a name other than its legal name. A general ...

South Carolina LLP Laws

South Carolina law regulates how a Limited Liability Partnership, or LLP, may form, operate, and ultimately dissolve. ...

Sole Proprietorship Laws in Illinois

For individuals looking to start a business without partners, a sole proprietorship is a common business entity because ...

How to Prove a Business Partnership Exists

Whenever two or more people decide to carry on a business together, a partnership is formed. Two types of ...

Browse by category
Ready to Begin? GET STARTED