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By: mdw Asked about 2 years ago

New Practice Setup

What is the best legal setup for my new practice with a friend?

My friend and I wish to set up a small architectural practice, designing primarily residential projects initially. He is a few years older, fully qualified and ARB registered, whereas I am at present only qualified to RIBA Part 1, albeit with more than 15 years of experience in the industry. What is the best legal setup for us to fairly divide the responsibilities and liabilities, which we want to be completely equal? I do not want my new business partner to be more exposed from a liability point of view than is completely necessary, and I certianly do not want him to bear personal/financial/legal responsibility for my work, which I feel should absolutely be my own. We are both insistent that this new business is to be a completely fair partnership between us, and that the legal structure should be a reflection of this.

mdw

john toppin [ Editor ] Apr 7, 2010 (Edited Apr 28, 2010)

From a liability perspective only:

Generally, for either a Limited Company or Limited Liability Partnership - if you and your friend were 50:50 Shareholders or Partners you would have equal risk and equal reward.

If you were 50:50 Partners in a traditional Partnership you would normally both have equal reward but unlimited liability.

I would recommend you speak to a lawyer to get advice on the best structure for liability and on having a proper shareholders agreement or partnership agreement drawn up that reflects your wishes.

There are differences as far as tax is concerned and for LLP and Partnerships you will both usually be treated as self employed. In a Limited Company you would both normally be employed by that company, commonly as its Directors. Talk to a qualified tax advisor.

(btw I am not a tax advisor or a solicitor).

As to why do this at all, see http://bit.ly/aJynCb

NN comments

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