Why You Should Consider Partnership Contract as a Sole Trader

Starting your own businesses can be exciting and confusing at the same time. One of the main reasons people prefer the sole trader route is because they don’t have to deal with the stress of running a large company with several shareholders. It also means they get to keep all the profit to themselves, and are not answerable to others.

But even with that, most people prefer to have at least one partner who can help them with their business. Setting up a partnership can help you ease the burden that comes with the responsibility of operating your own company.

However, even with partnerships, it’s important to set boundaries and craft a contract to help define the responsibilities of each owner.

Advantages of Partnerships

Whether you want to expand your business or share similar ideologies with the other person, it’s important to have everything in written form. This will prove to be helpful in the future in case you want to dissolve your partnership, or one partner goes bankrupt.

With that in mind, there are a few benefits of entering a partnership. Here are some of them:

Flexibility: partnerships are easier to form because they aren’t subjected to all the policies multinationals and large businesses have to follow. Furthermore, that aren’t any shareholders so the partners are the only ones who get to have a say in how the business is run.

Shared Responsibility: both partners are required to share the responsibilities of running the business. Rather than splitting the responsibilities of managing the company, they can also split workload tasks according to skills and abilities.

Furthermore, since there aren’t subordinates and other management, the partners only have to answer to themselves.

Capital: Without having to answer to shareholders or divide the profits, the partners can split the costs amongst themselves. A partnership contract helps specify the amount that will be split amongst the owners.

Setting Up a Partnership

While setting up a partnership doesn’t have to be stressful, there are a few laws individuals need to follow in the U.K.

The partners share equal responsibilities for their business. This includes:

• Losses the business encounters
• Bills for the stock and equipment the business purchases

In addition, it’s also important to note that a partnership does not need to involve an actual person. A limited company also counts as a legal partner.

In order to set up a partnership, you first need to:

• Choose a name for the business
• Choose the person you want to start a partnership with
• Hire a solicitor to craft a partnership contract
• Register with the HM Revenue and Customs

If you are looking for a solicitor who can advise you about the legal obligations of setting up a partnership, look no further. At Wembley Solicitors, our experts have the legal knowledge to help you craft a partnership contract that covers all your interests.

We also offer legal advice for other cases as well, including commercial leases and slip and trip compensation claims.

For further information, you can contact us at 020 3417 3700 or send an email to info@wembleysolicitors.com.