If you are thinking about starting your own business, or you are a successful sole trader who is looking to expand your business, perhaps you have already thought about a business partnership agreement. If not, find out more about the benefits, with this ten-point guide.
1. A business partnership agreement is a legally binding arrangement between at least 2 and no more than 20 people.
2. Business partnership agreement are commonly used by people offering professional services such as Doctors, Solicitors and Accountants. It is not uncommon for partners to specialize in different areas of their chosen profession to broaden the appeal of the business, and so gain more customers or clients. Two solicitors who specialize in family law and business law might choose to form a partnership, as might three accountants who are experienced in bookkeeping, tax advice and financial advice.
3. All partners are entitled to an equal share of profits, and are also equally liable for any losses incurred by the business, no matter which partner was responsible for the losses.
4. All partners are entitled to receive payment for expenses incurred as part of carrying out their job. These can include expenses for car parking and petrol, entertaining clients and hotel accommodation.
5. Each of the partners can take part in the management of the business. This can be useful if each partner has different areas of expertise, such as employment law, family law, and property law. Each partner can head up their own team of specialists as required by the business.
6. No partner will be paid by default, so partners will need to ensure that they do get paid!
7. If a potential partner wants to join the business, this has to be done with the consent of all the existing partners. Nobody can be added to the partnership if
8. No changes can be made to the nature of the business without the consent of the existing partners. If the business wanted to change from a firm of accountants to dentists, all partners would have to agree to this.
9. The company financial accounts and books must be held at the main place of business, and all partners are entitled to see them whenever they want to.
10. Any partner can bring the partnership to an end by giving notice to the other partners. Depending on the type of agreement, this may be the end of the business, or, there may be the option to replace the person who leaves, subject to approval by the existing partners.
Business partnership agreements are great ways to expand your business, and take advantage of skills and experience that will compliment your own in order to provide a better product or service for your customers.
Take the appropriate legal advice and with a business partnership agreement, you can ensure that your business can get off the ground, and continue to expand. Now might be the right time to think about breaking into new markets, or increasing your customer or client base. See what a business partnership agreement could mean to you.
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