A Partnership can be formed by two or more people agreeing to operate in conjunction with each other and there need not be a formal written document or Partnership Agreement. Although this flexibility appeals to many people, it is not without issues. Without a written document the roles and responsibilities of each party are not recorded and there is no agreement as to what would happen in the event of any party wishing to bring the Partnership to an end.
Partnerships are governed by the Partnership Act 1890. All Partners are jointly liable for the debts of the Partnership and have an implied duty of good faith to each other. Partnerships can be used in many different areas, from professional practices, to regulate business relationships, through to governing simple relationships such as owning a rental property with another individual.
All monies received by the Partnership are taxed as income and there is no separate legal entity for the Partnership itself. Over recent years there has been a move to incorporate some Partnerships either as Limited Companies or as Limited Liability Partnerships and Sole Proprietors are said to make up approximately 25% of all businesses.
We are able to give advice in relation to all aspects of Partnership law, including formation, Partnership Agreements, regulation of Partners and dissolution and retirement.