In this second instalment I’ll show you the pros and cons of having partners. Sharing the burden of responsibility can be wonderful, but be warned, it can be fraught with dangers too!Having partners does have benefits such as:
• you have more money to invest in the business.
• you share the worries and concerns.
• you share the debts involved with the business.
• the more people there are involved the more people there are to contribute to the success of the business.
• you do not have to worry if you are ill or want to have a holiday as there are other people to cover for you while you are absent from work.
But, as with being a sole trader, there are disadvantages as well:
• you have to share the decision making with others, so you cannot just decide to do something and get on with it. You’ll have to have a meeting with the other people involved in the business and make sure that you agree before any changes can be implemented.
• you have to consider the fact that you may begin the partnership as good friends and then have disagreements over decisions later on.
• if your business gets into financial trouble you will be liable for not only your debts, but those of your partners too. So, if one of them skips the country with the proceeds of the business and leaves you with nothing you will still be liable to pay their share, even if you’ve done nothing wrong!
• there are much stricter laws regarding partnerships so organising and running your business is more complicated.
• issues such as sharing of profits can cause disputes in cases where, for example, one partner has contributed financially whilst the other has contributed expertise. It is important to make sure these issues are clearly defined in a partnership agreement at the start to prevent ambiguity and possible disputes later on.
• complicated partnership business laws usually mean the involvement of lawyers will be necessary from the outset.
Hopefully, you have been drawn to one form or the other, depending on your resources, personality and finances. And, now you have a better insight into the pluses and pitfalls of both, a decision on the best form for you should be easy.
