Partnerships Business type


A partnership involves 2 or more persons who run a business as co-owners.

There are 2 common types of partnerships:

  • General partnership involves 2 or more general partners who share equal rights and responsibilities in managing the business.
  • Limited partnership involves at least one general partner and limited partner(s).
    • General partners own and manage the business
    • Limited partners serve as investors only

Some key features of a partnership are:

Set up a partnership

Visit CalGold’s How Do I Start My Business for more information.

Limited partners

As a limited partner, you:

  • Contribute an amount of money or property to the business when it’s set up
  • Are only liable for debts up to the amount you’ve contributed
  • Cannot manage the business
  • Cannot remove your original contribution

General partners

As a general partner, you:

  • Are liable for all business debts
  • Control and manage the business
  • Can make irreversible (“binding”) decisions for the business

Filing requirements

You must file a Partnership Return of Income (Form 565) if you're:


Each partner must use a Partner's Share of Income Deductions, Credits, etc. (Schedule K-1 565) to report share of partnership’s income, deductions, credits, property, payroll, and sales.

General partnerships do not pay annual tax; however, limited partnerships are subject to the annual tax of $800.

For information on estimated payments, go to our due dates page.

Close your business (Dissolve)

To close a partnership, you must notify the IRS and us that you are no longer in business.

You must:

  1. Decide to close your business
  2. File dissolution documents
  3. Cancel registration, permits, licenses, and business names
  4. Comply with employment and labor laws
  5. Pay any outstanding bills
  6. File your final tax paperwork and maintain records

Visit Guide to Dissolve, Surrender, or Cancel a California Business Entity (FTB Publication 1038) for more information.

Revive your business

To revive your suspended or forfeited business entity, you must be in good standing with the California Secretary of State.

You must:

Visit Guide to Dissolve, Surrender, or Cancel a California Business Entity (FTB Publication 1038) for more information.

Apportionment and allocation

You may have California source income if you sell goods to California customers or perform a service to customers who received the benefit of that service in California or own an intangible used in California. Visit Apportionment and allocation for more information.