If There Are Multiple Partners, Who Fills Out the Personal Information To Be in Compliance With Small Business Laws?

If there are multiple partners, who fills out the personal information to be in compliance with small business laws? Are you making the transition from being an employee to entrepreneur?  Are you in the process of a small business start-up?  Have you decided what type of small business you will operate… sole proprietorship, partnership, C-Corp, S-Corp or LLC?  What starting capital investment do you have, or will you be seeking small business financing?  If there is more than one owner of the business, who fills out the personal information?  And why?

With multiple partners, it is wise to have each of the partners provide their personal information on required documentation to be in compliance with small business laws.  In the case of business credit applications, it is standard to complete more documentation than applying for a home loan and certainly more than for any consumer credit. This is because the lenders require complete knowledge, not only about the business itself, but also about the entrepreneur(s). The lender can then tailor the loan to most aptly suit the needs of the business. Credit history and collateral of each principal is a key factor to the success of securing the loan.  Business and personal financial statements, as well as business and personal credit scores will be considered. 

Some Credit Unions require the name, title, social security number and percentage of ownership for all partners, as well as the collateral.  In a general or limited partnership, each partner reports their share of partnership income on individual tax returns.  The small business does not pay taxes as its own entity. In a limited liability company, members report their shares of small business income on individual tax returns.  The business does not pay taxes as its own entity.  In a C-Corp, shareholders pay taxes on their earnings and the corporation pays its own taxes.

Another instance when it is beneficial to provide personal information of each principal is to have related experience resumes to assist customers who deem it pertinent to their specific requirements.  For example, signing a contract with a business that is building a highly technical device, the customer would need to know what relevant qualifications and experience the owners/partners have had. The more informed and reassured the customer is, the more likelihood of securing a signed contract. Please contact us for more information about being in compliance with small business laws and mutliple partners in a small business.