Formation of a Partnership
In order to form a partnership there must be two or more persons carrying on the business in common with a view to profit.Most partnerships are governed by the Partnership Act 1890 and unless a Partnership Agreement states otherwise, all partners of the business are jointly and severally liable for the debts of the partnership whilst they are partner. This means that where the partnership is unable to pays is debts out of the assets of the partnership, the creditor is entitled to obtain payment from the private estates of the partners.
When forming a partnership, the costs of setting it up are relatively small and consequentially the day-to-day administration is carried out by the partners. There is also a duty of utmost faith between the partners.
You must also consider a trading name for the business. This is commonly the surnames of the partners, but it can be another name as long as that name is not already in use by another business. If the trading name does not include the partners' surnames then it must make sure that all business stationary and a plaque outside the main office displays all the partners' names as well as the trading name.
In all cases the best way to form a partnership and agree its terms of business is to agree a Partnership Agreement.
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