A partnership is a legal structure that allows individuals to work together towards a common goal, without being personally liable for each others’ debts and obligations. This type of arrangement is commonly used by small businesses and entrepreneurs who wish to limit their personal exposure to potential losses. In addition, partnerships allow owners to split profits and losses among themselves according to their respective contributions.
There are three main types of partnership: general partnership, limited partnership and LLP. Each type has different advantages and disadvantages. For example, a general partnership requires a formal agreement and is open to anyone; however, it offers no protection for creditors and does not offer limited liability. On the other hand, a limited partnership provides some protection for creditors and limits the partner’s liability to the amount invested in the venture. An LLP offers limited liability, but is only open to certain categories of people such as lawyers and accountants.
The advantages of a corporate alliance
A business partnership allows you to work together towards reaching shared goals. This could mean you both benefit from each other’s expertise, experience or contacts. You might even decide to pool resources to make your business better.
There are many benefits to having a business partnership, including:
• Two businesses working together can help you reach your goals faster.
• Partnerships allow you to focus on what you do best – running your business.
• Your business partners can provide support and advice.
• If one partner leaves, it won’t affect the whole business.
• Partnerships enable you to grow and develop your business together.
Forming a Limited Partnership
Setting up a limited liability partnership (LLP) is a great way to protect yourself against personal liabilities for companies you set up. But it does come with some extra costs and requirements. If you do decide to go down this route, here are five reasons why you might consider doing so:
1. Formalise Your Relationship With Others
When you set up an LLP, you’re legally bound to act in good faith towards your fellow members. This makes you responsible for managing the affairs of the company effectively and professionally, and it ensures you keep your promises and commitments.
2. Protect Against Personal Liability
If someone gets injured while working for your company, they could sue you personally for damages. However, if you’ve formed an LLP, you won’t face any personal liability for the actions of your colleagues.
3. Make Business Decisions Easier
You don’t have to worry about whether you’ll have access to information about your company – because you can’t disclose confidential information without breaching confidentiality agreements.
Partnerships – Tax matters
Each partner needs to file a Self Assessment Tax Return each year. This includes partnerships. A partnership is treated like a company for tax purposes. If you are a partner in a partnership, you must register for Self Assessment Tax. You cannot claim a refund without registering for Self Assessment Tax.
You do not need to pay Self Assessment Tax if you are not registered for Self Assessment Tax. However, you will still need to file a Partnership Account Statement.
The deadline for filing Self Assessment Tax returns is 31 December.
If you miss the deadline, you will face penalties. These include interest charges.
Partnerships – Legal issues
The fact that both parties are equal doesn’t mean that everything goes smoothly. Sometimes things do get messy, and sometimes one party starts to take advantage of the relationship. This is where the law comes into play. When you set up a partnership, you’ll want to ensure that you’ve got the paperwork sorted beforehand. You’ll need to look at the following documents:
• Deed of partnership
• Articles of association
• Memorandum of understanding
• Shareholders’ agreements
• Employment contracts
• Incentive plans
• Tax returns
If you don’t have any of these documents, you might find yourself in trouble. A court case could be brought against you if someone feels that they haven’t been treated fairly during the running of the partnership.
Partnerships – Choosing a business name
Choosing a business name can be difficult. You want something catchy, memorable and unique. But you don’t want it to infringe on someone else’s trademark. In fact, choosing a name that infringes on another company’s trademark could lead to legal action against you. So how do you choose a name that won’t cause problems down the track? Here are some tips to help you avoid infringing on others’ intellectual property.
1. Choose a name that isn’t already taken
If you’re looking to start up a new business, check out the Business Name Search tool on the Australian Trade Marks Office website. This free online database lists over 300 million names registered under Australia’s trade mark system. To find out whether your proposed name is already being used, simply enter the name into the search box. If there’s no match, you’ve got yourself a brand new business opportunity.
2. Check your domain name availability
You might think that registering a domain name is free, but it’s actually quite expensive. Domain names cost money to buy and renew, and many companies charge extra for premium domains such as.com.au,.org.au,.net.au,.edu.au and.gov.au. If you’re thinking of buying a domain name, make sure you register it early enough to ensure you pay the lowest possible price.
3. Don’t use a word that’s too close to another company’s trademark
This rule applies even if you’re not planning on selling products or services that compete directly with those offered by the owner of the trademarked term. For example, if you plan on starting a travel agency called ‘The Travel Agency’, you shouldn’t call your company ‘Travel Agency’. Even if your business doesn’t offer anything similar to what the original company offers, you still risk infringing on their trademark.
The benefits of establishing a regular collaboration
Unregistered partnerships don’t require registration. This makes it easier to set one up, especially if you’re just starting out. You won’t need to file paperwork or pay filing fees. And there is no limit to the number of people you can partner with.
There is no limit to how much money you can make as long as you report your income correctly. However, profits must be reported on a federal tax return. If you do not want to pay taxes on your earnings, you’ll need to register your partnership as a corporation.
All profits made by the partnership belong to each member equally. Members cannot claim ownership over the partnership assets unless they contribute capital.
You can dissolve an unregistered partnership whenever you choose. Dissolution doesn’t affect your personal liability.
An unregistered partnership is less legalistic than registering your company. For example, members can agree to buy goods and sell them without having to go through a board meeting or shareholders’ meeting. Also, you can change the name of the partnership at any time.
Negative aspects of unregistered partnerships
Unregistered partnerships are often used to avoid paying taxes. They are often set up by people who want to limit liability and protect themselves against personal bankruptcy. However, they are not treated like companies when it comes to taxation.
An unregistered partnership does not have a separate legal identity, and therefore cannot sue or be sued. This makes it difficult to resolve disputes over unpaid debts. In addition, partners do not receive dividends, and profits are taxed twice – once at source and again at capital gains tax rates. Finally, an unregistered partnership is prone towards problems if there is a family member involved. If someone dies, the surviving partner must pay inheritance tax on the deceased person’s estate.
There are many risks associated with establishing an unregistered partnership. A limited company is much easier to register and maintain. On the other hand, an unregistered partnership requires a lot of work and attention. You need to keep track of each partner’s contribution to the partnership, and ensure that everyone pays his/her fair share of expenses.
Frequently Asked Questions
Other than registering with HMRC, do you need to complete any other legal documentation?
If you are planning to set up a limited company, you will probably want to make sure you do some basic things like registering your company name, getting a VAT number and filing your accounts. But what else is required? A quick look online suggests that you could be missing out on some important steps.
A recent article published on Business Insider UK suggested that many people don’t realise they need to complete certain tasks such as filling in forms, making payments and even registering with HM Revenue & Customs (HMRC).
The author says: “You’ll often hear entrepreneurs say ‘I’m just starting my business’ – but actually, that doesn’t mean much. If you’re doing anything remotely commercial, you must register your business with HMRC.”
However, there is no requirement to file tax returns unless you earn over £83,000 per annum, according to the government’s official site. And while it is true that you don’t need to pay tax on your profits until you reach that level, you do need to declare your income and expenses.
What Is The UK Retirement Age In 2022?
The government announced plans to raise the state pension age to 70 by 2028. This move is designed to save money. But what does it mean for you?
In the long term, it could make life harder for some people. If you are planning to retire soon, you might find yourself struggling financially. You’ll probably have less money coming in each month. And if you want to keep working, you might struggle to afford childcare.
But there are ways to prepare for this change now. Here are some things you can do today to help you cope with retirement later.
1. Start saving early
If you don’t start saving now, it will take you longer to build up enough savings. So try to put aside 10% of your salary into a pot that you can draw from every month.
2. Get financial advice
You might think that once you stop work, you won’t need to worry about money anymore. But that isn’t always true. A financial adviser can help you plan how much you need to live comfortably and how best to spend your money.