A sole proprietor must obtain federal and state tax identification numbers if the business has employees. A sole proprietor who will hire employees also will need an Unemployment Insurance (UI) employer account number, a Paid Leave Administrator Account, and must secure workers’ compensation insurance for employees. Generally speaking, employees may include family members. However, wages paid to a parent, spouse, or minor child of the sole proprietor are not reportable to unemployment insurance. A sole proprietor who will be selling a product or service that is subject to sales tax will need to register for sales and use tax purposes. These taxes and procedures for obtaining tax numbers are discussed in the section of this Guide on business taxes. Sole proprietors who will be hiring employees also should review the section of this Guide on Issues for Employers.
FORMING A PARTNERSHIP
There are several types of partnerships you can form: • General Partnership (GP) : All partners manage and are personally responsible for the business. Refer to Minn. Stat. Chapter 323A. • Limited Partnership (LP) : At least one partner (the “general partner”) manages the business and is personally responsible; the “limited partner(s)” invest but are generally only liable up to the amount they invest, and don’t take part in daily management. Limited partnerships file a Minnesota Limited Partnership | Certificate of Limited Partnership with the Office of the Minnesota Secretary of State (fee for filing). Fee for filing. Refer to Minn. Stat. Chapter 321. • Limited Liability Partnership (LLP) & Limited Liability Limited Partnership (LLLP) : Provides partners with protection against some business liabilities—requires special registration. LLPs file a Minnesota Limited Liability Partnership | Statement of Qualification. LLLPs file the Statement of Qualification and elect LLLP status. Forms are filed with the Office of the Minnesota Secretary of State. Fee for filing. Refer to Minn. Stat. Chapter 323A. Foreign partnerships (formed outside Minnesota or outside the US) must meet additional registration requirements. Key Steps to Form Your Partnership • Choose your partnership type: Decide what structure fits your needs—GP, LP, LLP, or LLLP. • Name registration : If your partnership name does not include all partners' full names, file an Certificate of Assumed Name with the Office of the Minnesota Secretary of State.Fee for filing. • Create a partnership agreement : Not legally required, but highly recommended. Address issues like who manages the business, partners’ ownership shares, profit and loss allocation, dispute resolution, how to admit new partners, and rules for when a partner leaves or passes away.
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