Business Solicitors

What is a partnership?

Under the legislating act of 1980, a partnership is defined as “the relation which subsists between persons carrying on a business in common with a view to profit”. In plain English, this means that if you and your partner are working together somehow to try and make money, then in the eyes of the law you are in an official ‘partnership’. There are some exclusions however, such as if you are operating within a limited company (ltd.). Limited companies are covered by a separate piece of law which means they are excluded from the provisions of this particular act. It’s even possible for two different limited companies to form their own business partnership or for a limited company and an individual to become partners.

Partnership or limited company?

When you deal with a company for the first time, it feels safer to be dealing with a registered limited company. Something about the official sounding name and nature of the company will encourage nervous potential customers to trust that firm. However, the experts will often say that this does not alone necessarily mean that a limited company is the best option for you or for you partnership. The directors of a limited company do have limited liability for financial problems but while they are trading there are far more checks and auditing requirements involved. You need to really keep your eye on the books if you operate under a limited company.

Annual reports and accounts must be filed with Companies House and are typically publicly viewable. If you are intending to set up a new company then you must take legal advice before doing so. Are you really happy for your personal information to be publicly viewable along with the reports and accounts of your company itself?

Making records

When you have an agreement with someone pertaining to something as potential important as a partnership it is important to have this in writing. Where there is no formal written agreement or where a written arrangement is not properly formed there is often a wide scope for potential problems. Even though things may seem problem free right now, even the most solid of partnerships and personal promises are put to the test by the world of business. It is in both you and your partner’s interests to formally outline the details of your partnership so that in the event of disputes they can be dealt with cleanly, efficiently and without massive further legal costs to both people. It’s also important for simpler reasons – sometimes it may be necessary to prove to the courts that you actually have a partnership, but if no written confirmation exists then how will anyone believe you?

Free advice now

As you can see, the world of partnerships and business setups is a literal minefield of legal problems! But it need not all be doom and gloom – free expert advice in on hand to help you clear the way through the worst of setting up a partnership, or troubleshooting one you already have. Simply fill in the form on this webpage and one of our expert partnership solicitors will get in touch with you shortly to offer some free advice on your particular situation, with no obligation to continue should you not wish to. We look forward to helping you soon.