How to Set Up a Partnership in Tennessee
A Tennessee partnership exists whenever two or more persons form "a business or other undertaking for profit" that conforms to the state's Revised Uniform Partnership Act.
The persons who form partnerships can be individuals, corporations, trusts, associations, government agencies and even other partnerships. The partners may set up their business arrangement to accomplish a specific purpose, to expire at a particular date or to run indefinitely.
Other People Are Reading
Instructions
-
-
1
Discuss with your partners whether you want your partnership governed by Tennessee law. Even if you're based in Tennessee, if your business operates in another state as well, you may choose to set up a "chief executive office" there and operate under the other state's laws. The Revised Uniform Partnership Act doesn't define what constitutes a chief executive office, which gives you some flexibility setting one up.
-
2
Draw up a partnership agreement. Tennessee law doesn't mandate you do this, but a written agreement spelling out the partners' powers and finances can save you a lot of grief. A well-constructed agreement states what each partner will contribute to your company; how you divide losses and profits among yourselves; what authority each of you has to sign contracts or otherwise commit to the company; and how you'll make business decisions.
-
-
3
Decide on your business name. Often, if your business name is anything other than your and your partners' names — Smith and Jones, for instance — you have to register it with the state. In Tennessee, general partnerships and sole proprietorships don't have to do this.
-
4
Begin operating your business with your partners. In Tennessee law, if you meet the definition of a partnership — doing business with other persons for profit — you've created a partnership whether you intended to or not.
-
1
Tips & Warnings
Partners must deal with each other in good faith. They must act loyally toward the partnership. This doesn't ban acting in their own self-interest, but it prevents, for example, setting up a competing business to the partnership. You can use the partnership agreement to define specific acts as not violating the obligation of loyalty, provided this exemption isn't "manifestly unreasonable."
The Revised Uniform Partnership Act exempts some business relationships, such as joint tenancy with right of survivorship, from automatically creating a partnership when you don't intend one.
