2 Matter Plans Included
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ALERTS - Nil
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Full Commentary - Partnerships
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Reference materials
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AI Prompts
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Electronic Signing and Witnessing
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Looking to the Future
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Business Structures and the Comparative Table
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Further information
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Overview
The relationship between general partners is contractual and fiduciary. Trust and good faith are fundamental to this relationship. A corporation may be a partner, either in its own right or as trustee of a trust or a limited liability partnership (LLP).
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Summary of the process
The usual steps in acting in a partnership matter include:
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A. Getting the matter underway
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File cover sheet - Partnerships
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To do list - Partnerships
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First steps
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Retainer instructions - Partnerships
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Compliance documents
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Client Due Diligence and Anti-money Laundering Guidance
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Client details, identity verification, source of funds, and source of wealth
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Record of compliance checks
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Compliance monitoring form
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If required - Reporting an issue
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Anti-money laundering internal disclosure
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Initial letter to client enclosing Client Care and Terms of Business - Partnerships
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Enclosures for initial letter to client
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Client care information
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Terms of business
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Scope of work - Partnerships
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A summary of the partnership process
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Time and costs estimates
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If required - Updating costs estimate
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Letter to client updating costs estimate
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General deeds, agreements, statements, declarations, consents, and execution clauses
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Deeds and agreements
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Deeds
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Deed for general use
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Deed of assignment of agreement
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Deed of assignment of agreement with consent
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Deed of assignment of an insurance policy
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Deed of assignment of equitable interest in residential land
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Deed of gift
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Deed of guarantee
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Deed of release
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Deed of release and grant
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General deed of indemnity
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Library of standard clauses for deeds
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Amendment
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Confidentiality
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Confidentiality - Extensive
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Costs
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Counterparts
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Dispute resolution
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Events beyond control
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Governing law and jurisdiction
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Interpretation
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No assignment
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Notices
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Severance
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Third parties
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Waiver
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Whole agreement
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Agreements
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Agreement for general use
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Boundary agreement
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Confidentiality agreement
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Construction agreement
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Heads of agreement
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Library of standard clauses for agreements
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Amendment
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Confidentiality
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Confidentiality - Extensive
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Costs
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Counterparts
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Dispute resolution
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Events beyond control
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Governing law and jurisdiction
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Interpretation
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No assignment
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Notices
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Severance
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Third parties
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Waiver
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Whole agreement
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Execution clauses
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Execution clauses - Agreements and contracts
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Execution clauses - Deeds
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Execution clauses - Overseas companies
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Statements and declarations
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Affidavit - General
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Exhibit sheet for affidavits - General
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Statement of truth
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Statement of truth - High Court
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Statutory declaration
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Statutory declaration of no interest in property
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Statutory declaration of solvency
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Witness statement - Civil matters
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Exhibit sheet to witness statement - Civil matters
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Witness statement - Family matters
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Exhibit sheet to witness statement - Family matters
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Consents
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If required - Personal data consent - General
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Letter to client enclosing general consent
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Letter to third party enclosing general consent
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Letter to third party requesting personal data and enclosing client’s general consent
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Letter to third party requesting personal data and enclosing third party general consent
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Client’s consent to provide information - General
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Third party’s consent to provide information - General
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If required - Personal data consent - Health professional
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Letter to client enclosing consent - Health professional
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Letter to third party enclosing consent - Health professional
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Letter to doctor enclosing client consent
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Letter to doctor enclosing third party consent
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Client’s consent for health professional to provide information
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Third party’s consent for health professional to provide information
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Change of name
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Change of name deed for an adult - Concise
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Change of name deed for a minor - Concise
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If required - Enrolment by an adult
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Change of name deed for an adult - For enrolment
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Statutory declaration - Enrolment of adult change of name deed
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Notice for the London Gazette on the change of name of an adult
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Consent to enrolment of change of name of an adult
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If required - Enrolment by a minor
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Change of name deed for a minor - For enrolment
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Statutory declaration - Enrolment of minor change of name deed
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Affidavit of best interest for the change of name of a minor
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Consent to enrolment of change of name of a minor
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B. The partnership agreement
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Types of partnerships
There are 3 types of partnerships:
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Establishing a partnership
Establishing a general partnership Establishing a general partnership is a relatively simple process. The broad legal and financial requirements include:
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Powers, rights and responsibilities of partners
As partners hold a fiduciary relationship with one another, each partner is regarded an agent of the other partners when conducting business and has the ability to bind them. Therefore, the relationship expects partners to act in business for the benefit of all and to avoid conflicts between their ...
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Eligibility as a general partner or manager
Certain restrictions apply to being a general partner or manager of a limited partnership or incorporated limited partnership. A potential partner may be ineligible if they are:
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Partnership property
General and limited partnerships lack an independent legal personality. It is important to distinguish between partnership property and a partner's personal assets. Any partnership property must be held and used by the partners exclusively for the partnership business and in accordance with the ...
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Apportionment of liability
General partnership Regarding third parties, each partner in a general partnership is jointly and severally liable for the debts, obligations, and actions of the other partners and the firm as a whole. After their death, a partner's estate is also severally liable for debts and obligations that ...
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Taxation
Guidance on giving tax advice Although tax advice is often only a part of the overall advice given to a client under a retainer, the Law Society has published general Guidance for solicitors advising on tax. The guidance summarises the key aspects of the frameworks practitioners must consider when ...
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The partnership agreement
A formal written agreement is not always necessary for a general partnership to exist. The agreement between partners can be oral or even implied. However, partnership agreements that effect a transfer of interests in real property must be in writing. Even though a written agreement may not be ...
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Partnership agreement
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Limited partnership agreement
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Limited liability partnership agreement
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Prompt comparing instructions with draft partnership agreement
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Prompt for letter to client with advice on a partnership agreement
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Letter to client with draft partnership agreement
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Library of clauses for partnership agreements
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Expulsion clause
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Notice of determination of partnership
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One partner to have sole management
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Representative clause for a corporate partner
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Termination of partnership
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C. Registration and applications
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Application for registration of a limited partnership in England, Wales or Northern Ireland
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Appointment of member of a Limited Liability Partnership (LLP)
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Appointment of corporate member of a Limited Liability Partnership (LLP)
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Application for the incorporation of a Limited Liability Partnership (LLP)
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Set up a business partnership
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HHRMC - Check how to register for Self Assessment
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HMRC - Self assessment: register a partnership for self assessment
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HMRC - Register as an employer
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HMRC - Register for VAT
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Application to register a trade mark
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D. General business
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Letter to partners giving notice of meeting
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Minutes of meeting
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Letter to partners on admission of a new partner
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Agreement for admission of a new partner
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Deed of assignment of interest in a partnership
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Deed of variation of share of profits and losses of the partners
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Letter to other partners - Notice of retirement or resignation of partner
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If required - Library of precedents for small business clients
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Agreement for supply of goods and services
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Anti-fraud policy
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Credit application
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Data protection policy for a business
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Dispatch and delivery policy
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Director guarantee
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Example - Full VAT invoice
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Example - Job descriptions
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Example - Modified VAT invoice
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Example - Simple VAT invoice
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Liability waiver and consent
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Returns and refunds policy
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Terms of trade
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Website terms of use for advertising and booking personal services
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Website terms of use for downloadable online products
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Website terms of use for physical products
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E. Succession planning
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Succession planning and unexpected events
A thorough succession plans can prevent disputes and reduce disruption to business operations, providing a clear course of action in unforeseen events such as the permanent injury, bankruptcy, expulsion, or death of a partner. Succession planning can also be used to ensure the remaining partners ...
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Cross option agreements
Cross option agreements, also known as put and call option agreements, or double option agreements, are commonly included within the clauses of a well drafted partnership agreement; however, they can also be used as a separate document alongside a partnership agreement. The precedent Cross Option ...
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Succession agreement for partnership
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Explanation of cross options and funding agreements
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Cross option agreement
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Cross option funding agreement
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Letter to client with draft agreement
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F. Dispute resolution
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Mediation
Mediation provides cost and time savings and can be especially beneficial for partnerships involving small businesses with limited financial resources. In mediation, an impartial and independent third-party is appointed to work with the parties either together or separately and to assist them in ...
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Conciliation
The conciliation process is similar to mediation; however, the parties may appoint a conciliator to propose a non-binding settlement. A conciliator may have professional expertise in the subject matter in dispute and will generally provide advice about the issues and options for resolution. A ...
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Arbitration
An arbitrator can be appointed by the court or by the parties to the dispute. The arbitration process is similar to mediation; however, the decision made by the arbitrator is binding on the parties and any award is enforceable. Mediation, conciliation, and arbitration provide a private way to ...
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Litigation
Litigation involves the parties to a dispute asking the court to determine the outcome. The court's decision is binding on the parties and enforceable. Litigation is the most expensive and time-consuming method of dispute resolution. It is also usually conducted in public. The stressful, ...
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Letter to other partners to refer partnership dispute to mediation
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G. Dissolution and winding up
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General partnership – Dissolution
General partnerships are not separate legal entities from the partners; therefore, any change in the partners' ownership results in the dissolution of the partnership. In some cases, the partnership may be immediately reformed with the remaining partners or a new partnership established with the ...
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Letter to partners dissolving partnership
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Dissolution and continuation of partnership
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Letter to partners concerning the expulsion of a partner
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Limited partnerships – Winding up
When winding up limited partnerships, the considerations are similar to those of a general partnership, but with some differences. A limited partnership is not dissolved if a limited partner allows their share of the partnership property to be used for their own separate liabilities. Additionally, ...
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Limited liability partnerships – Winding up
Since a limited liability partnership (LLP) is a separate legal entity, it can only be dissolved by voluntary or involuntary winding up or by applying for a strike-off from the LLP register.
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Striking off application by a Limited Liability Partnership (LLP)
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Withdrawal of striking off application by a Limited Liability Partnership (LLP)
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H. Finalising the matter
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Letter to client finalising matter
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Example invoice
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Invoice recital - Partnerships
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Information sheet - Explaining the bill and authority to deduct
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Closing the file
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File closing checklist
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File review form - General
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Comments and suggestions for By Lawyers
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Business Structures and the Comparative Table
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Overview
This publication is designed to assist when establishing a new business, acquiring an existing business, and changing business structures. It covers the essential elements and the advantages and disadvantages of each possible structure in relation to:
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A. Comparative table
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Comparative table
The following table considers:
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B. The structures
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Sole trader
A sole trader is the simplest business structure. The business has no separate legal existence from its owner. It is owned and run by one individual who is responsible for all debts and liabilities of the business. Sole traders may trade under their own name or register a business name at ...
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Partnership
A partnership is a relationship between two or more entities carrying on a business to make a profit. A minimum of two partners is required to form a partnership under s 1 of the Partnership Act 1890. There is a statutory maximum of 20 partners, but there are many permitted exceptions, ...
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Company
Private limited companies There are two different kinds of private limited companies; those where liability is limited by shares, and those where liability is limited by guarantee.
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Joint venture
A joint venture is not a separate legal entity but an agreement to act in concert for a particular purpose. It is a commercial relationship between two or more entities for a particular undertaking to realise mutual commercial gain. The parties forming a joint venture might each have unique ...
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Not-for-profit organisations
Associations Associations are not normally considered business structures as they serve to protect a committee and members of a group, usually conducting an activity that will not generate a profit.
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C. Comparing the structures
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Income tax
Income tax is payable on the taxable income of an individual member of a legal structure depending on the type of structure and how the income is taken. The first payment for a new business is made in arears. For a tax year ending 5 April, a self-assessment tax return must be filed by the following ...
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Capital gains tax
Capital gains tax is applied to any profits made arising from the disposal of an item, for example, by selling, swapping, or giving it away. The gain is taxed, not the amount of money received. Disposals chargeable to capital gains tax include personal possessions except vehicles, additional ...
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Stamp duty land tax
Sole traders purchasing residential property are treated as individuals, and the same rates and reliefs apply. Partnerships own property in the individual names of the partners, and the individual rates and reliefs apply.
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Corporation tax
Limited companies pay corporation tax on trading profits, investments, and chargeable gains from selling assets such as land and property, equipment, machinery, or shares. All profits are taxable. There is one rate of tax appliable no matter the profit or gains made. This rate is lower than the ...
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Asset protection
A sole trader is liable to the full extent of their personal and business assets. In a partnership, the partners are liable for debts of the partnership, including being liable for debts incurred by a partner without the knowledge or authority of the other partners.
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Control and succession
Most clients seek to minimise their tax liability, protect their assets, and retain full control of their affairs. A sole trader has full control but as seen above is taxed on all income and capital gains and is fully exposed to creditors. Succession can be by way of sale or gifting the assets and ...
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Set up and running costs
The set-up costs for a sole trader are minimal and this structure also has the lowest running costs. In addition, the principal is not an employee of the business and therefore compulsory employee pension contributions, PAYE and employment rights do not apply. The drafting and signing of ...
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D. Other considerations
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Relationship between entities, names, and trade marks
Many clients believe they have protected a trading name by registering a company name, business name, or domain name. This is not the case. A business name is merely a name under which a business operates. Companies must register with Companies House, and all who pay self-assessed tax must register ...
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Guidance on giving tax advice
Although tax advice often forms part of the general advice given to a client, practitioners need to bear in mind the following:
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