The way the Partnership Act 1890 works is that it sets out a default set of rules that governs all partnerships unless the partners involved have an agreement to the contrary which will often take the form of a “partnership agreement”. The same applies to Limited Liability Partnerships (LLPs) with the Limited Liability Partnerships Act 200 setting out a default set of rules.
Unfortunately some of the default provisions of the Partnership Act 1890 are rather draconian and unhelpful to running a modern business. For example the default position says all partners have an equal entitlement to the partnership profits, regardless of the amount of time or effort they put into the partnership. Another example is that a partner cannot simply retire. Instead, if a partner wants to leave (or dies) the partnership has to be dissolved, assets realised or divided up and a new partnership or business formed by those who wish to carry on the business. This is a time consuming, unhelpful, complicated and expensive process.
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The first stage is to understand how partnerships and LLPs work and whether either of those structures is right for you from a legal risk perspective which is often balanced against a tax efficiency perspective.
If you do decide a Partnership or LLP is right for you then it is essential a properly drafted partnership or LLP agreement is drawn up and entered into at the outset. There is significant flexibility to vary the default provisions but this has to be done with expert help and guidance which the Corporate Team here at Gorvins can provide by bringing a wealth of experience (both legal and practical) to the matter in hand.
Once the initial structure has been set up and a suitable partnership or LLP agreement has been drawn up the Corporate Team can provide continued support to advise on matters such as on-going compliance issues, disputes that may arise between the partners, the exit of a partner or the admission of a new partner.
Our aim is to make sure the advice we deliver is comprehensive, practical, proactive and easy to understand.
Contact the Corporate Law team today on 0343 507 5151, e-mail firstname.lastname@example.org or complete the online form on the right and we will call you back at a time convenient for you.
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