Advice on business partnership.

wire-screw

wire-screw

wire-screw

Associate
Joined
1 Jul 2012
Posts
339
I can't find much on this on the official websites. Me and a friend want to start a small business together and are looking to register. I started an application on Companies House but there I could only register for limited companies. How do I register for a sole trader or business partnership? Is it a case of just registering for self assessment then saying we're now a business called such and such?

Thanks
 
Yes you will self assess. In its simplest form you will be declaring half the profit as your income, of course a good accountant will sort everything out for you dependent on the complexity.
 
Any reason why you don't want to go the limited company route? I don't think Sole Trader is an option for you if there's two of you.
 
As Jokester said, you're not going to be a Sole Trader.

"A sole proprietorship, also known as the sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business.
The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. It is a "sole" proprietorship in contrast with partnerships. A sole proprietor may use a trade name or business name other than his or her legal name."​
 
You don't need to register anywhere to form a partnership - you will deemed to have formed one by operation of law. Still, it's worth setting out your expectations in a document that you both sign in case the default position is different from your intentions of how the partnership will operate. A high street solicitor will knock up a bog standard partnership agreement for a few hundred pounds.

Edit: To be a bit more helpful, consider the following:

- How profits and liabilities will be shared
- Voting rights
- The scope of each parties duties and their ability to bind the partnership
- How you will add members, leave or dissolve the partnership
 
Last edited:
You should use a limited company with both of you as shareholders. This way you are protected if he (or you) decide to take everything.
 
86JR said:
You should use a limited company with both of you as shareholders. This way you are protected if he (or you) decide to take everything.
Click to expand...

It depends entirely on the nature and value of the business. If there is a low risk of liability then there potentially isn't much benefit, especially with the administrative burdens.
 
seriously - if going into business with someone - go and see an accountant, explain the situation and they will give you advice as to the best way to proceed.

DON'T take advice from an online forum.

Spend a few hundred quid getting it right from the start.
 
If you're serious about this, go and pay a relatively small amount of money and get proper advice.

It can have severe ramifications down the line in terms of liability, control etc.
 
GSWAudio said:
Tell me more.
Click to expand...

LLPs are only available at the moment as far as I know, for certain profession such as Chartered Accountants, Solicitors, Butt Plug manufacturers, etc. so depending on your business venture that may not be an option for you.

As said above, for a decision of this magnitude, after all it is your livelihood, seek the advice of an accountant.
 
As has been said, it's probably a good idea to get proper advice from the accountant. At the very least you want a partnership agreement in place detailing, amongst other things, how the profits and losses of the partnership are to distributed amongst the partners.

Other than that (and assuming its a partnership you want and not a Limited Liability Partnership), all partners will need to file a form SA401 to register themselves for self assessment and a single form SA400 needs to be filed to register the partnership.
 
Redz said:
LLPs are only available at the moment as far as I know, for certain profession such as Chartered Accountants, Solicitors, Butt Plug manufacturers, etc. so depending on your business venture that may not be an option for you.

As said above, for a decision of this magnitude, after all it is your livelihood, seek the advice of an accountant.
Click to expand...

Any new or existing company with two or more people can incorporate as an LLP. I would look at LLP or Ltd simply because it shifts the risk and liabilities to the company and not the partners.
 
Moses said:
Why would you recommend a limited partnership? Why would they want one of them to be liable for the company's debts and the other not, in this small business between friends scenario?
Click to expand...

It doest work like that, its very similar to a Ltd in that "partners" are liable only upto the amount they initiallyinvested, ie you cant lose more than you put in. it was a vehicle that allowed predominantly large law firms the ability to mitigate risk between partners whilst retaining the traditional company structure of associates and partners.

In an LLP or ltd you can not be personally held liable for partner misconduct or debt, the company can but you personally can't be. With a partnership if one of the other partners astronomically ##### up you will all be personally liable.
 
You must log in or register to reply here.
Back
Top Bottom