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Wednesday, 02 October 2013 21:23

Business Partnerships - What are they?

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business_partnershipbusiness_partnershipAre you interested in starting up a small business as a partnership, or do already have a small or medium sized enterprise and want to bring in someone new as a partner?

If you answered “yes” to either of these questions then there are certain legal partnership agreements that you will need to consider.

What Constitutes a Partnership?

A partnership is when two or more people decide to go into business together and equally share in its profits.

 

A partnership is when two or more people decide to go into business together and equally share in its profits.

Because it is relatively easy to set up, partnerships are a very popular way to form a business. All partners involved are considered self-employed. It is widely advised that such business set-ups are governed by partnership agreements.

Unlike other business structures like a limited company, the legal entities consist only of the partners (no shareholders, etc.). In the event that something unfortunate happens to the partnership, e.g. bankruptcy, resignation or death of a partner, the partnership must be dissolved. In this scenario, a partnership dissolution agreement is advised. However, the business can continue to function whilst a new structure is put into place.

Partnership Agreements and Liability

Unlike a “limited” partnership, all persons in a partnership are liable for any debts or liability that may occur from the business. In Northern Ireland, partners are not severally liable. This means that no one partner has to pay off the entire debt. However, should a partner resign, the remaining partners may be liable for the debt that remains. In the case of insolvency, creditors can go after the assets of any or all partners.

Because of these legalities, it is best that you research a proper partnership agreement suitable to you.

How Do I Set Up a Partnership?

There are several recommended steps to follow in order to form a successful business partnership. Listed below are some of the most important factors you should consider.

  • Create a business plan.
  • Enter into a legal business partnership agreement. Standard partnership documents are available online or go to a solicitor.  Go through this in detail and agree every point.
  • If you use your own name, you won’t need to register a business name. If you don’t then you will need to register a partnership business name with the Companies Registration Office.
  • Have your finances worked out, decide on the levels of investment from each person.
  • Decide on the share percentages of each partner and how this may change over time, e.g. levels of input - financial, time, etc.
  • Open a bank account, and obtain the services of an accountant (you do not need to do this immediately).  You can only open a bank account when you show the bank proof that you have registered the business name or are using your own name.
  • Register the business for tax, VAT (there are rules attached to this) and as an employer (if you plan to hire employees).  All of this can be done on the one form.
  • If you plan to hire employees, it is necessary that you become acquainted with the Safety, Health and Welfare at Work Act of 2005.
  • Find out if you need to obtain a business license to legally run the business. In Ireland, enterprises that always require a business license include pubs, employment agencies and driving schools.
  • Find a suitable location from which to run your business.
  • Consider the types of insurance you will require (liability, fire, etc.).

Online Business Partnership Agreement

Whether you’re starting up a business partnership or adding a partner to an existing business, it is often recommended that you have a solicitor draw up the necessary partnership documents.

However, there are many reputable online websites that offer very affordable partnership agreements without the need for hiring a solicitor.

The Synergy Group will guide through this whole process.

Read 2250 times Last modified on Wednesday, 02 October 2013 21:46
Robert Tallent

Bob is a Management Consultant, Mentor and Trainer. He is also an Entrepreneur from 1983 to the present day. Between 1983 and 1995 he ran four businesses with a turnover in excess of £1m. As well as having an Honours Degree in Business Studies, he is also an Industrial Engineer and managed a large department in a multinational with large budgets and responsibilities.

He studied to become a Management Consultant, Mentor and Trainer and setup The Synergy Group in 1995.

He has a huge range of business and management experience in practically every industry.

Call him privately on +353(0)87 232 6927

or email him on bob@synergy.ie

Main land line is +353(1) 821 5189

Website: www.synergy.ie
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