California Partnership Filing Requirements

A partnership allows two or more individuals to co-own and operate a business by pooling resources, skills, and financial capital. In California, establishing and maintaining a partnership involves specific legal and tax requirements to formalize the business. The state’s legal framework provides different partnership models, each with distinct implications for liability and management. Understanding these structures is the first step for entrepreneurs looking to formalize their joint business venture in the state.

Choosing Your Partnership Structure

When forming a partnership in California, the initial decision is selecting the appropriate legal structure. This choice significantly influences liability, management, and administrative requirements. California recognizes several types of partnerships, and the structure you select will define the legal relationship between the partners and the business’s obligations.

A General Partnership (GP) is the most basic form and is the default structure if no other is specified. In a GP, all partners share in the management responsibilities and profits. A key characteristic is that all partners have unlimited personal liability, meaning their personal assets could be used to satisfy business debts and legal claims. This structure does not require registration with the California Secretary of State to be legally formed, but doing so can establish certain legal presumptions.

A Limited Partnership (LP) provides a different allocation of liability and management. An LP must have at least one general partner who manages the business and assumes unlimited personal liability. It also includes one or more limited partners who contribute capital but do not participate in day-to-day management; their liability is restricted to the amount of their investment. This structure is often used for real estate or other investment-focused enterprises.

For certain licensed professionals, such as lawyers, accountants, and architects, the Limited Liability Partnership (LLP) is an available option. An LLP offers liability protection to all its partners from the professional malpractice of other partners. While partners are still liable for their own misconduct and business debts, their personal assets are shielded from claims arising from the negligence of their associates. This structure combines partnership tax benefits with liability protections.

Regardless of the type chosen, a Partnership Agreement is a foundational document. While not always required to be filed with the state, this internal agreement outlines the operational rules of the business. It defines partner roles, how profits and losses will be distributed, and establishes procedures for handling a partner’s departure or the dissolution of the business.

Information and Forms for State Registration

Before a partnership can be formally recognized by the state, specific information must be gathered and the correct forms must be completed. This preparatory step is important for a smooth registration process with the California Secretary of State and helps prevent delays.

The first step is to collect the required information for the registration forms. This includes:

• A proposed partnership name that has been checked for availability on the Secretary of State’s online database.
• The principal business address and a separate mailing address, if applicable.
• The full legal name and address of each general partner.
• An Agent for Service of Process for LPs and LLPs, who is an individual or registered corporate agent in California responsible for receiving legal documents.

After compiling the necessary information, you must complete the appropriate state form for your partnership structure. The standard filing fee for each of these forms is $70. For a General Partnership choosing to register, the Statement of Partnership Authority (Form GP-1) formalizes its existence and specifies which partners have authority for certain transactions. A Limited Partnership must file a Certificate of Limited Partnership (Form LP-1), which establishes the LP and details its general partners and agent. A Limited Liability Partnership must file an Application to Register a Limited Liability Partnership (Form LLP-1), which is for licensed professionals and requires information on the services offered.

The Initial Filing Procedure

Once the necessary information has been gathered and the forms are completed, the next phase involves the formal submission to state and federal authorities. This procedural stage transitions the partnership from a concept to a legally recognized entity.

The primary step is submitting the registration documents to the California Secretary of State. This can be done by mail, in person at the Sacramento office, or through the state’s online portal. An additional special handling fee applies for documents delivered in person for immediate processing. Upon approval, the Secretary of State will return a filed-stamped copy as official confirmation of registration.

If the partnership operates under a name that does not include the surnames of the general partners, it must file a Fictitious Business Name (FBN) statement. This statement is filed with the county clerk’s office where the principal business is located. After filing, the FBN statement must be published in a local newspaper once a week for four consecutive weeks.

After state registration, the partnership must obtain a Federal Employer Identification Number (EIN) from the IRS. An EIN is required for most partnerships for federal tax purposes, including filing tax returns and hiring employees. This number can be obtained online from the IRS website.

Annual Tax and Reporting Obligations

After the formation of a partnership, ongoing compliance with California’s tax and reporting requirements is necessary to maintain good legal standing. These obligations are managed by different state agencies, primarily the Franchise Tax Board (FTB) and the Secretary of State.

Limited Partnerships (LPs) and Limited Liability Partnerships (LLPs) must pay an annual minimum franchise tax of $800 to the FTB. This tax is for the privilege of doing business in California and is due even if the partnership is inactive or generates no income. General Partnerships are not subject to this tax.

All partnerships doing business or earning income in California must file an annual Partnership Return of Income (Form 565) with the FTB. This is an informational return reporting the partnership’s income, deductions, gains, and losses. The partnership itself does not pay income tax, as profits and losses are “passed through” to the partners, who report them on their personal returns using a Schedule K-1.

LPs and LLPs must also file a Statement of Information with the Secretary of State every two years. This report updates the state on the partnership’s principal address, agent for service of process, and general partners. The filing fee for this statement is $30.