1. You have decided to set up your business as a partnership. Now you need to decide whether it is to be an ordinary partnership or a Limited Liability Partnership.
2. Discuss all angles of the business with those you are planning to work with and agree on main priorities.
3. An ordinary partnership allows from 2 up to 20 partners to set up in business without registering.
4. You will need to register a Limited Liability Partnership and file incorporation documents with Companies House and you will be legally obliged to file accounts and returns each financial year
5. If an ordinary partnership is what you choose, you should seek professional advice and have a formal partnership agreement drawn up by a solicitor.
6. Decide how much capital each partner is to invest and how profits and losses are to be shared.
7. Ensure there is a precise definition of the role each partner is expected to play.
8. Define occasions when the agreement of all partners is necessary e.g. taking on a loan.
9. Write in clauses on admitting new partners and on ending the partnership.
10. Make yourselves aware of all the legal implications such as your joint liability for debts of partnership and the fact that you will be classed as self employed for tax purposes.
11. Should you feel that you need more protection for personal assets against possible financial losses you will choose to set up as a Limited Liability Partnership (LLP).
12. At least 2 people should be nominated as designated members who are responsible for ensuring compliance with legal requirements in formation, running and winding up of the partnership.
13. Take legal advice about drawing up a contract agreement to suit the specific circumstances of you business as with all partnerships, as the provisions of LLP legislation may not be adequate.
Do’s & Don’ts:
Do:
Look carefully at the pros and cons of both types of partnership.
Make sure you understand your personal financial liabilities in an ordinary partnership.
Take legal advice on drawing up an agreement.
Be prepared for all the legal requirements for a Limited Liability Partnership
Don’t:
Underestimate the need for full plans to be written down before you start.
Rely on LLP legislation to cover every aspect of your partnership - draw up a contract
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