California Tax Service Center

General Partnerships

What is a General Partnership?

A general partnership is a business entity that is made up of two or more entities to carry on a trade or business. Each partner contributes money, property, labor, or special skills and each partner shares in the profits and losses from the business.

What is the Difference Between a General Partnership and a Limited Partnership?

In a general partnership all the partners are personally liable for the partnership debts. In a limited partnership, limited partners are not liable for the partnership's debts beyond the funds they contribute to the partnership. A limited partner will normally have little knowledge or participation in the activities of the partnership. For more information regarding limited partnerships please see the Limited Partnership section.

Revised Uniform Partnership Act (RUPA)

RUPA governs the formation, operation, and liquidation of all partnerships formed after January 1, 1999. For more information regarding RUPA, please call the California Secretary of State, Business Filings at (916) 657-5448, or visit their website at www.ss.ca.gov.

Doing Business in California and Other States

General partnerships that do business in California and other states must apportion their income using Apportionment and Allocation of Income (Schedule R).

Example: In 2000, a New Jersey general partnership, opens an office in California. Since the general partnership is doing business in both New Jersey and California, it must file a Partnership Return of Income (California Form 565) and use Schedule R to apportion income between the two states.

For more information, see helpful publications at the end of this section.

Investment Clubs

California conforms to federal rules that allow certain types of partnerships that do not actively conduct business, to elect not to be treated as partnerships. Under this election, the partners report income or loss on their personal returns.

Election: The eligible partnership must make the election no later than the time for filing the partnership return, including the extension. For more information regarding Investment clubs please see federal Partnerships (Publication 541).

Filing Requirements and Related Questions

What form do I file for my general partnership?

General partnerships file Partnership Return of Income (Form 565).

Does California treat small partnerships the same way as federal?

No, California has not conformed to the federal small partnership provisions. These provisions allow partnerships with 10 or fewer partners (all partners must be domestic, individual partners) to avoid being treated as a partnership for tax purposes. As a result, these partnerships do not file federal partnership returns and are not subject to federal return filing penalties.

For California, these partnerships are treated like all other partnerships and must file partnership returns. They are subject to all California partnership taxes and penalties.

When is Form 565 due?

Form 565 is due on the 15th day of the fourth month after the close of the year. If the due date falls on a Saturday, Sunday, or a legal holiday, the filing date is the next business day.

Automatic Six-Month Extension to File: California grants, an automatic six-month extension beyond the return due date to file Form 565. A return filed after the extended due date is treated as delinquent, with the late filing penalty computed from the original return due date.

Helpful Publications

General Partnership Information

Doing Business in and Outside of California