If you’re thinking about setting up a business, you may be considering a partnership over a limited company. While this may be the best thing for your business (a partnership is easier to set up than a limited liability company and doesn’t have to be registered at Companies House), there are always things to consider before you make the big leap. One of the biggest issues when setting up a business partnership – and one of the main things that people get wrong – is actually choosing your partner or partners. If you team up with the wrong person, it isn’t just your business that will end up on the line – your personal finances could also be at risk. Here are a few tips on how to choose a partner that will be right for both you and your business.
Find Someone Like You, But Not Too Like You
Of course, you want to go into a partnership with someone similar to you; someone who holds the same values as you and wants the same ultimate goals – if you don’t find someone like this, the partnership could be doomed from the start. Having the same commercial goals is essential, otherwise you’ll both have different priorities and be working towards different things. On the other hand, you don’t want to go for a partner who is exactly the same as you; a partnership works best if you complement each other in terms of the skills you have. For example, if you have experience with the product or service you’re selling but don’t know too much about the business side of things, partner up with someone proficient in budgets and accounts who can look after the money. It’s all about putting your skills and talents together to form the best combination you can possibly get.
Ask Those Awkward Questions Before You Go Into A Business Partnership
Whether you know your potential business partner well or not, there are certain things you need to ask them before even considering going into business with them, and while this may seem awkward and an invasion of privacy, you simply have to know these things before agreeing to anything. The main thing is their financial situation and credit rating; if, for example, your business has to apply for a loan and one of you has bad credit, you’re unlikely to be successful, so make sure you’re fully aware of their financial history beforehand.
Make Sure You Can Trust Them
Most important of all, you need to be able to trust your partner – with the business, with your reputation, and with your finances. Even if you trust them completely, it’s always a good idea to sign a written partnership agreement. This isn’t a legal requirement for partnerships, but it’s incredibly useful if you come into difficulties further down the line.
If you have any questions about setting up a partnership – or any other type of company – it’s always recommended to get the advice of a specialist lawyer first. They’ll be able to answer your queries and make suggestions as to what you need to do next.
Tim Bishop is senior partner of Bonallack and Bishop – UK Solicitors specialising in partnership law and business law in general. For more information about partnership law and business partnership disputes, call them on [01722] 422300 or visit their specialist website at http://ww2.partnership-dispute.co.uk.
Tim Bishop
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