Q: Do I need to file a silent partnership agreement with the city of Los Angeles in order for it to be legal?
I would like to start a business with a partner where everything is split 50/50 in the middle (profits, losses, liability, responsibilities, and authority). The business is currently filed with the city of Los Angeles as an Individual Owned Business. Does it need to be filed as a Partnership? Or can we sign a Silent Partnership Agreement and keep everything in their name? If it's possible, how do we go about Bank Accounts and Taxes? We are in Los Angeles County of the state of California.
Also, are there any limitations if one of the partners is a legal US Permanent Resident while the other is a US Citizen?
Thank you for your time.
A: You state you filed your business with the City of Los Angeles, but that does not establish any rights to the business name. Usually, cities simply collect a yearly fee from you because they can. The easiest thing to do is file a fictitious business name Statement with the County of Los Angeles. That allows you to protect your business name (once you have one), and protect it for (I think) five years. You can form a written partnership, but to do it properly usually requires the help of a good attorney. However, the process of forming a partnership is helpful to answer a lot of questions that might not otherwise come up. A partnership is taxed as a partnership, with the partners splitting the profits and/or losses. A form "K" must usually be filed for that purpose, one for each partner. A bank account should be opened in the name of the business. Forming a good partnership runs about $1,000 to $1,200.
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