Choose the right partnership agreement

Entering into a partnership occurs automatically whenever two or more people set up in business together with a view to making a profit.

If the individuals choose not to set up an agreement, the terms of the partnership are set out by the 1890 Partnership Act. However, these can be amended if a separate agreement or deed is drawn up in order to regulate the partnership. Ralli Partnership Law can help to draft up such agreements, providing specialist legal support to those forming a partnership.

General Partnerships and Limited Liability Partnerships

In a general partnership, all individuals are liable for the debts and profits accumulated by the business.

When setting up a partnership, many Ralli Partnership Law clients instead opt for a Limited Liability Partnership (LLP). Created by the Limited Liability Partnership Act 2000 – and like a half way house between a partnership and a company – this corporate vehicle provides members with limited liability, making it a more attractive option than a general partnership for some.

As LLPs are separate legal entities to their members, the individuals are not liable for the debts and obligations of a firm outside of the amount they contribute, unlike those in a general partnership. The LLP is a person at law and has the ability to employ staff and enter into contracts. However, similar to standard partnerships, members are taxed as individuals. When entering a general partnership or an LLP, it is recommended that an agreement is in place to control the relationships between members.

As an LLP needs formal incorporation and registration at Companies House, investing in specialist legal support from Ralli Partnership Law may be wise. Contact our experts on 0161 832 6131 for a consultation when forming a partnership. We can help you to register an LLP and draft agreements, while also offering legal support for tax issues, exiting a partnership and dissolution.