What is a Partnership?

What is a Partnership?

A partnership is when two or more people agree to work together to run a business. There should always be a partnership agreement drawn up between the parties in order to avoid potential confusion over what responsibilities each partner has. It is advised this agreement be drawn up by a solicitor. In a partnership, all debts and profits are split according to the agreement, or if there is no agreement, they should be split equally among all partners.

 

Setting Up a Partnership

A Partnership in a business that is created when 2 or more people to run a business together.

 

A Partnership must register their business name with the Companies Registration Office.

https://www.cro.ie/Publications/Business-Names-Forms

 

A partnership must also register as a partnership, for central tax purposes, with the Revenue Commissioners. Good bookkeeping and account records are very important for a partnership, particularly where the partnership agrees specifically on incomings and outgoings to be paid for, partners’ salaries and drawings or profit sharing. The self-assessment tax system in Ireland is used to calculate the amount of tax a partnership will pay each year.

http://www.revenue.ie/en/self-assessment-and-self-employment/documents/form-tr1.pdf

 

It is very important you get a partnership agreement drawn up, ideally by a solicitor. This solves any problems that may arise between disputing partners down the line. Consider it a prenuptial agreement for a business. If no agreement exists between the partners, all profits and debts are split equally between all members of the partnership, regardless of responsibilities of the partners responsibilities within the company or your intention to have an unequal split of profits.