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Going into informal partnership: any advice (or point me towards who I should be paying for the info!)(16 Posts)
TheArtic - the reporting requirements for an LLP are pretty much the same as for a Ltd company so if you can't afford an accountant and can't do Ltd company accounts yourselves then LLP is not going to help. A normal partnership would be easier but obviously wouldn't help with limiting the liability.
Thanks Mrs81! I think will
explore this further.
never, ever go into business with somebody 'informally'
even your spouse.
a partnership (old style, not limited liability) costs nothing to set up
a limited company costs very little
an LLP would seem OTT to me for a startup
PS- I found the first year's cycle of paperwork is the hardest, thereafter it gets easier. Just make sure you keep copies of ALL forms!
We do it ourselves. Though my business partner's hubby is an accountant and he can be persuaded to check over paperwork for a cup of tea and a biscuit.
He's not had to correct stuff for us (yet) but does explain things for us when we get stuck. Though I'm sure HMRC and Companies House would both help us (a bit) if we asked them.
Mrs81 - do you use an Accountant or submit your returns yourself?
I'm entering into a similar arrangement as the OP. We were thinking of setting up a partnership via self-employment as Ltd Company is too onerous and we can't afford accountancy fees but I am concerned with the issue of liability. Perhaps a Limited Liability Partnership would be a better option if we can complete the paperwork ourselves.
If you might be a ltd company in due course, setting up as an LLP now might not be an easy switch - take advice!
An LLP doesn't help you with splitting the brand if that's what you want in future.
Of course, pm away
We went for the llp option because whilst claims in our line of work are extremely rare they could easily escalate (I don't think the starting level of the professional insurance is below a million pounds). We also felt (rightly or wrongly) that it would help create a more professional image and give potential clients greater confidence.
Mrs81 that's really helpful, thanks! I've have a think about what I might need to ask, & then might pm you if its ok? What made you decide to go limited liability?
Ok, you're convincing me!!! In the sort of work we do it would be VERY unusual for us to have much in the way of liability, but I think the issue of what happens if we build u a brand & one of us chooses to leave is a much more realistic issue. And whilst I've worked with both of them for years & years, they haven't worked together much.
So ... Do we need to see a lawyer or an accountant (all my paperwork to date had been very st forwards and done by an accountant mate for a box of naive wines!!)
Any advice on th best way to think about branding/identity? Clearly if it works & we do well, we'd move into ltd company terrify, so at this rage I'd be thinking of something st forwards ... So we repay any upfront costs if one of us chooses to leave? If we disband, co one is allowed to use the name without permission from the others so we could then negotiate a fair rate if we felt the name had value???
And thanks - spent ages googling & couldn't get anywhere!
I'm in a very similar position and we set ourselves up as a Limited Liability Partnership. There's a bit of extra paperwork involved but not much. The most tedious bit is having to submit two tax returns - one for the partnership as a whole and one for myself in my self-employed status as part of the partnership (if that makes sense). There's also a spot of Companies House stuff (but much more low key than what a limited company would need to do).
Also, depending on what you do, any insurance you take out would be covering the partnership plus memebers and thus protects individual homes etc (worst case scenario but still...!). Our individual insurance costs aren't any greater for being teamed up.
We do have a sort-of agreement in place... We adapted one of the standard ones to suit us (though have winged it a bit too).
Hope that helps but PM me if you want to know more
You do need an agreement I would say.
If I'm your client/creditor and something goes wrong and I see you as a partnership entity, then I'm coming after all three of you, basically. You do need to work out branding and ownership issues too. And what would happen if one of you got a job offer the day before you'd contracted to do a piece of work?
There's all sorts of legal issues. If you really don't want to get an agreement, you could have some sort of 'collective' branding and present yourselves as a loose collection of traders. Kinda like Not on the High Street, iyswim. But even then someone will 'own' the identity.
You don't need to have to get a legal document drawn up but it is very advisable I would have thought. You probably won't need it, but if you do then it could save you money and stress. Even if you know each other well, that is different to working with each other in a partnership.
At the very least it will make you sit down and go through all the issues that might come up from how you get/share work through to debtors and what happens if somebody sues you etc.
I had my t and c drafted by a lawyer via peopleperhour.com but it is probably better to go and see somebody.
I had a feeling I would get that answer, flibberty All of us are already freelancing, & working together - so tbh, I think we probably ARE more in the domain of 'some mates working together' at this stage - the only reason to do anything 'official' is to get a website with a bit more oomph behind it, iykwim.
I can totally see that we need to think about brand & webname ownership - but other than that, there wouldn't be much in the way of shared assets. We would really not want to get into totally shared finances if we can avoid it (we all run home offices and can just see it getting complicated)
Do we need to see a lawyer to draw up agreements even for something like that?
Never do anything like that informally. Get an agreement drawn up. Who would own the brand if you ever fell out? Who would own the website/domain name etc. You may already work well together but some things have 'potential for dispute' so you need everything written down and agreed from the start.
Its either a partnership in every legal sense of the term, or its just some friends working together.
I am looking to go into an informal partnership with two very long term colleagues. We would want a brand identity and website in common, but would ideally like to continue operating as sole traders - sorting money between us on a project basis (we already work together on projects, so money splitting not an issue)
Has anyone done anything similar, and if so, any advice on how it works? I've spent a while googling & am not throwing anything up - so maybe this isn't a 'proper' way of working ...??
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