A partnership is a business venture whereby the business is run by a number of joint owners. The owners (or partners) of the partnership have responsibility for running the business between them and decisions, profits, losses, and liabilities are all shared amongst them. A partnership is automatically formed when more than two people decide to work together for the benefit of making money. Therefore it is vital that the relationship between the partners, their responsibilities, their profit sharing, and their obligations are all properly recorded. This is done through a Partnership Agreement, and Hewetts have a great deal of experience preparing bespoke partnership agreements for newly-started or existing businesses, as well as advising on already-existing Agreements. We are based in Reading but operate a national service.
For Initial Free Advice Call Oliver Kew on 0118 955 9612
Partnerships are commonly associated with professionals such as accountants, doctors and solicitors, but any business can be defined as a partnership if it so wishes. Because so many decisions within the partnership are dependant on some or all of the other partners agreeing, conflicts often arise between the people running the business. A lot of these conflicts lead to partnerships failing which is why a partnership agreement, detailing the exact nature and conditions of the relationship everyone is entering into, can be vital to keeping the business running.
There are two main types of partnership, both of which Hewetts can advise on:
As explained above. Full partnerships have between two and twenty partners. They are subject to the Partnership Act 1890, which will govern all partnerships in the absence of an agreement to the contrary. There are therefore many aspects of statute law that might not conform with your business model, or your idea of how your business will run. It is therefore better for your business to be governed by an Agreement, instead of the sections of the Act, many provisions of which may surprise you in their application.
Limited Liability Partnerships (LLP’s) are rarer and are subject to The Limited Partnership Act, 1907. A limited partnership is formed when one or more of the partners invest capital into the business but does not participate in running and managing the business. Those partners can only lose the amount of money initially invested. The disadvantages are that the LLP must be registered at Companies House, must meet their stricter rules, and must publish their accounts annually.
Here are some of the things that will be included, and can be discussed, in a Partnership Agreement:
For smaller partnerships some of these matters may require very little regulating, and therefore the individual clauses can be suitably adjusted. We can offer detailed Agreements for professional partnerships with numerous partners, or we can provide for two people looking to run a business for a short period of time, and anywhere in between.
If you are interested in creating a Parntership Agreement we would be happy to offer you a free first interview.
1. What are the advantages of a Partnership?
Here are a few:
2. What are the disadvantages of a Partnership?
Here are a few: