Formalities

Choosing and registering a legal structure for your business: Partnership

It may be no more formal than a handshake or may run to a multi-page legal document.

Whichever route you take, build the following points into your planning:

• In a partnership, each partner is liable for all the liabilities of the business. If the business fails, and your partner(s) abandon(s) you, you could be left to pay for everything out of your own pocket. Before entering a partnership, decide whether you trust your partner(s)-to-be with everything you own — because that’s essentially what you will be doing.
• If you write down nothing else, write down and have all the partners sign a partnership agreement setting out how the business is to be financed, how profits and losses are to be shared, and what will happen if one of the partners decides to leave. These are important points. Failure to agree on them at an early stage can lead to difficulty later.

Now consider the other legal structures that you can adopt for your business:

• Sole Trader
• Limited liability company
• Co-operative.

Alternatively, move on to consider the other aspects of formalities:

• Choosing and registering a name for your business
• Registering for taxation
• Setting up accounting systems
• Ensuring that your business meets all applicable legislation and regulations
• Ensuring that your business meets all appropriate quality standards
• Opening a bank account
• Arranging for appropriate insurance
• Protecting your business' intellectual property.