A general partnership must have two or more persons engaged in a business for profit. The business is not a separately taxed entity; rather, it is a conduit where the profit or loss flows through to the partners. The partners report their share of the partnership profit or loss on their individual income tax returns. All partners enter into partnership by either oral or written agreement that must cover all terms of the parties’ business relationship. Partnerships are quite flexible; a great variety of control and management structures are available by agreement.
Partners are jointly and severally liable for all legal and financial obligations of the partnership and for all wrongful acts of any partner acting in the ordinary course of partnership business. Partnership income is taxed as personal income to the partners.
A Statement of Partnership Authority (GP-1) may be filed with the Secretary of State at the option of the business entity. This document specifies the authority, or limitations on the authority, of some or all of the partners to enter into transactions on behalf of the partnership and any other matter. Upon receipt, the Secretary of State’s Office will review the statement for statutory compliance. Once the document is filed, the Secretary of State will return a file-stamped copy of the GP-1, and a Certificate of Registration to the general partnership.
Change or Dissolution
If the business filed a Statement of Partnership Authority (GP-1) with the Secretary of State, the business should file a Statement of Dissociation (Secretary of State form GP-3) to document the partner or partners that have dissociated with the partnership. If the partnership amends or cancels a partnership statement previously filed with the Secretary of State, the firm should note the details on a Statement of Amendment/Cancellation (GP- 7) and file it with the Secretary of State. To terminate the partnership, the firm should complete a Statement of Dissolution (GP-4) and file it with the Secretary of State. This will remove the company from Secretary of State records as an active entity for tax purposes.
For additional information about registering general partnerships, contact:
Secretary of State
Document Filing Support Unit P.O. Box 944225 Sacramento, CA 94244-2250
Tel: (916) 657-5448
Forms and References