What is a partnership?
A partnership is a business structure formed by 2 or more people or organizations (e.g. corporations or trusts). Partnerships aren't directly taxed. Instead, each partner is taxed on their share of the partnership's income.
There are a few different types of partnerships.
In a general partnership, all partners are legally responsible for the business's debts. This means that if the business goes into debt, those debts can be paid with the partners' personal assets. A general partnership is similar to a sole proprietorship except that you're working with at least 1 business partner.
In a limited liability partnership (LLP), each partner's assets and finances are separate from the business's assets and finances. This is similar to a limited liability company (LLC).
A limited partnership (LP) is a hybrid of the general and limited liability types: One member takes on full personal liability, and the other(s) take on limited liability.
According to the Small Business Administration, partnerships are a good choice for professional groups (like lawyers, doctors, or therapists) and for people who want to test out a collaborative business idea.
Establishing a partnership in Massachusetts
1. Make sure your business name is available
The Secretary of the Commonwealth lets you Search for a Business Entity to make sure the name you want is available.
If you're starting a general partnership, you'll want to check with your city or town, since general partnerships don't register with the Secretary of the Commonwealth. (Many cities and towns let you look up registered businesses. For example, the city of Boston offers a "Doing Business As" search.)
Consider also searching for businesses with names similar to yours to see what kinds of businesses might appear next to yours. For example, 2 businesses with very similar names might compete for search engine rankings.
2. File with the Secretary of the Commonwealth
Some types of partnerships need to register their businesses with the Secretary of the Commonwealth:
- File for a Limited Partnership Certificate (filing fee: $200)
- File for a Limited Liability Partnership Certificate (filing fee: $500)
- File for a Foreign Limited Partnership (filing fee: $200)
- General Partnership: Does not register with Secretary of the Commonwealth
3. Report beneficial ownership information (BOI)
Important: General partnerships can skip this step, since they don't file with the Secretary of the Commonwealth.
After the Secretary of the Commonwealth accepts your filing, you may have to file a beneficial ownership information (BOI) report. Filing is free and submitted to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Your BOI report must include information about your business (like its name, location, and tax ID number) and its ownership (like names, dates of birth, residential addresses, and proof of ID).
You'll also report information about your business’s company applicant(s). There will either be 1 or 2 company applicants. The first is the person who first registered with the Secretary of the Commonwealth. You may need a second if more than 1 person was involved in registering: The second is the person who is responsible for directing or controlling the filing.
Here are some examples of company applicants:
- 1-person example: You're starting a business. You register with the Secretary of the Commonwealth. You're the only company applicant.
- 2-person example: You're starting a business. You ask your administrative assistant to file with the Secretary of the Commonwealth. you and your administrative assistant are both company applicants.
You can learn more or file online at the FinCEN website.
4. Decide if you need a business certificate (DBA)
You must file a business certificate (sometimes called a DBA or “doing business as” name) if your business operates under any name other than its legal name. The “legal name” is the legal name of each partner.
For example, imagine you have a business called, “Smith & Sons Accounting Services, LLP." However, you think you'll get more clients using the name "FastTax Solutions."
You'll file your business certificate in the city or town where your business is located.
Learn more about if your business needs a business certificate and how to get one.
5. Get an EIN (Employer Identification Number) from the IRS
All partnerships must get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This is sometimes called a Federal Tax Identification Number and the application is free.
6. Register your business with MassTaxConnect
If your business is responsible for collecting and paying taxes to the state, you'll need to create a MassTaxConnect account. An EIN is required to register. You can pay business taxes to the Department of Revenue through MassTaxConnect.
Taxes and partnerships
Partnerships don't pay income tax, but they do report profits and losses to the IRS. income. Instead of the business paying tax, profits and losses "pass through" to each partner. Then, partners also report their income or losses on their personal tax returns.
Read IRS guidance on Partnerships.
State forms for a partnership to report income
The Massachusetts Department of Revenue explains the state tax requirements for partnerships.
Federal forms for a partnership to report income
The federal forms to file are Form 1065 (or Schedule K-1) or Form 1065B.
Learn more about federal taxes for partnerships.
How being part of a partnership affects your personal taxes
As a partner, you'll pay self-employment tax with your personal tax return. This covers your contributions to Social Security and Medicare. (You would normally pay these through payroll taxes, but partners don't get regular paychecks.) Learn more about self-employment tax.
You'll use Schedule E (Form 1040) to report income from your partnership on your federal tax return.
Additional operating requirements
Check if you need workers' compensation insurance
All Massachusetts employers must carry workers’ compensation insurance. This is required no matter how many employees you hire. This also applies to you if you’re going to be an employee of your business.
Annual reporting to the Secretary of the Commonwealth
If your partnership has to register with the Secretary of the Commonwealth, it also has to file an annual report. General partnerships don't register with the Secretary of the Commonwealth, and so they don't file an annual report.
You can file your annual report online.
| Partnership structure | Filing fee | Filing deadline | Form to file by mail |
|---|---|---|---|
| Limited partnership | $450 online, $500 mail | End of February | Limited partnership annual report form |
| Foreign limited partnership | $450 online, $500 mail | By the anniversary of your business registration | Foreign limited partnership annual report form |
| Limited liability partnership | $500 | End of February | There is no form. Your report should include all the information from your registration. If you provide professional services, include your certification(s). This report is defined in Massachusetts law 950 CMR 111.00: on Limited liability companies. |
Mail paper forms to:
Corporations Division
One Ashburton Place, Room 1717
Boston, MA 02108-1512
Changes to your business
Various changes to your business require you to update your business registration with the Secretary of the Commonwealth. For example, if a partner leaves or a new partner joins, you'll file an amendment to this Certificate ($100).
| Date published: | June 20, 2024 |
|---|---|
| Last updated: | March 27, 2025 |