Don’t Call It A Partnership!

When two people agree to form a business together, what would you guess they call it? Naturally, many people use the term “Partnership.” In some instances, Partnership is technically correct, like when two or more attorneys share an office and referrals, or two accountants do the same. However, today the term “Partnership” is misused by many, and it could have an impact on their business.

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Ultimate Checklist for Hiring Your First Employee in New York

Two businessmen speaking with a businesswoman and shaking hands with her as they offer her a job.

For many startups and businesses, hiring your first employees can be an anxious process. Hopefully, this checklist will help entrepreneurs get past the initial hurdles and feel more confident moving forward.

The Ultimate Checklist for Hiring Your First Employee in New York is in chronological order to the extent that some things need to be done before others, but the exact order doesn’t always matter. Do what you can as soon as you can to ensure you comply with federal and state requirements.

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What Is A Partnership?

The IRS defines a Partnership as “relationship existing between two or more persons who join to carry on a trade or business.” As such, the partnership does not pay taxes, but enjoys pass-through taxation. Each partner shares in the profits and losses of the partnership. The partnership furnishes a Schedule K-1 (Form 1065) when due to the partners.

Every state has laws regarding partnerships, but typically, there are no formal requirements to establish a partnership, such as filing a document with the state (as is typical for corporations and limited liability companies (LLCs) or drafting a partnership agreement.

There are three main types of Partnerships: (1) a general partnership, (2) a limited partnership, and (3) a limited liability partnership.

General Partnership

In a General Partnership, the partners share equally in the legal and financial liabilities of the partnership as well as the day-to-day management (absent a written agreement stating otherwise). General Partnerships are very easy to maintain and establish. They can be established by written or oral agreement, and could technically be established unintentionally under certain circumstances.

Limited Partnership (“LP”)

The LP typically includes one or more Limited Partners and a General Partner. Depending on the state, there may be some type of filing fees associated with the establishment and/or maintenance of an LP. Liability is typically limited for the Limited Partners, but not for the General Partner.

Limited Liability Partnership (“LLP”)

Unlike the other partnerships, the LLP provides partners with limited liability for acts that arise out of the business activities of the partnership so long as the partnership maintains its LLP status. The LLP offers a lot of flexibility in terms of form and structure in terms of allocating items like income, gains, losses, deductions, and distributions.

Does My Startup Need a Certificate of Authority to Do Business in NYC?

Certificate of Authority. A close up of startup employees reviewing figures and paperwork with a tablet and laptop.

New York State’s Department of Taxation and Finance issues Certificates of Authority to businesses which authorize them to collect sales tax from customers. This also allows them to honor the tax-exempt status of non-profit agencies with whom they do business. You might be wondering when and if you need a Certificate of Authority for your startup or business to do business in New York City; especially if you are a foreign (whether U.S. or international) entity.

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Everything You Need to Know About The California AB5 Law

Toyota Prius offering rides for UBER and LYFT in San Francisco Bay Area. These companies will be affected by the AB5 law.

California Assembly Bill 5 (AB5), signed into law by the state’s governor in September of 2019, went into effect on January 1, 2020.  Informally referred to as the “Gig Worker” bill, AB5 means some big changes for contractors and companies who use them. This blog will offer a broad overview of AB5, its current status, potential complications you might face, and some examples of ways California businesses and other businesses have responded to the new law.

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