Partnership agreements

Your agreement should set out the rules governing how the partnership operates, and should cover the main ´What happens if ...´ situations. If there is no agreement, there will be a large element of uncertainty, and applying the underlying law, such as the Partnership Act 1890, may well lead to undesirable results.

It is usually best to have a partnership agreement drawn up by a solicitor, but before you reach that stage you should think about exactly what you want the agreement to cover. In particular, you should consider:

Running the business

• Partners' duties
• Working hours and holidays
• Decision-making procedures
• Business premises
• Cars

Financial matters

• Profit-sharing arrangements, and drawings on account
• Partnership capital (and interest arrangements)
• Banking and financial arrangements
• Accounting arrangements
• Making provision for tax payments
• To identify what is partnership property for the availability of 100% (as opposed to 50%) business property relief for inheritance tax purposes.

Special circumstances

• Partner retirement procedures
• Death of a partner
• Providing for partners' retirements and dependants
• Disability of a partner
• Establishing the right to expel a partner
• Arbitration for unresolved disputes
• Business valuation procedures