A Denver business attorney at The McGuire Law Firm will assist partners and partnerships with partnership formation, partnership agreements, partnership taxation and other partnership issues. The information outlined below should help provide general information regarding partnerships and typical errors & “pitfalls” witnessed by our business attorneys.
Under Colorado partnership law, a partnership is defined as two or people operating a business for a profit. Thus, you may be involved with a partnership and exposed to certain liabilities without even realizing it. Every partner in a partnership should learn and understand their rights and responsibilities, and their obligation to the partnership and other business partners. As a Denver business attorney, Mr. McGuire recommends that all partners or partnerships seek the advice of competent business attorneys when forming the partnership, and during the life of the partnership when facing pertinent business decisions and transactions.
All too often partnerships are formed without a partnership agreement. The failure to have a proper partnership agreement in place often leads to unnecessary disputes and exposure to liability, and fails to adequately protect some or all partners. Every partnership should have a partnership agreement in place from the beginning of the partnership. The partnership agreement will establish the responsibilities and duties of the partners, how profits and losses are divided amongst the partners and the dissolution of the partnership.
All too often partnerships are “formed” but not properly formed and reported to the Colorado Secretary of State. The failure to file the business entity with the secretary of state may increase the partner’s exposure to personal liability. Within a general partnership, the partners are liable for the partnership debts and other obligations. If the partnership is unable to satisfy a creditor, the creditor may go after the personal assets of the partners. Every partnership should file the necessary documents with the secretary of state.
All too often partnerships are formed and the individual partners are unaware of the tax reporting requirements for the partnership and the individual tax consequences to the partners. This can create issues with the Internal Revenue Service at the partnership and individual level, which will inevitably affect the partnership in some way, shape or form. Upon forming a partnership, all partners should know and understand what tax returns the partnership must file and most importantly, how their individual income tax return may be impacted by partnership profits or losses.
A Denver business attorney at The McGuire Law Firm can help educate you regarding your options in forming a partnership, the tax consequences of the partnership to the partners and the partner’s liability and exposure to liability from the partnership. Moreover, an attorney can help file the appropriate documents with the secretary of state, draft partnership agreements and assist the partnership with pertinent business decisions and transactions as the partnership operates and grows.
If you are looking for immediate assistance with your specific tax situation, please give us a call to speak with an attorney today.
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