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April 21, 2015 at 10:23 am #991546CarolineAdamsMember
- Total posts: 1
I’m new to the site and loving all the advice.
I am beginning a business with a friend and am in the first steps of setting it up and we are already facing a big decision as we differ on how the structure should be.
Our product is a hired themed kit and we were always going to have a 50/50 partnership. Now my partner is proposing that we run the business with branding, admin and decision in an umbrella scenario (no income or expenses) with us each making, restocking, delivering our own themed kits as sole traders. It would mean that we are our own bosses in terms of time given, profit and expenses. However, I am not sure that it would work – what happens if one person does better than the other?
Any suggestions for me please? Is it actually legal? Is there someone out there that has this structure and it works?
Thanks, CarolineApril 22, 2015 at 11:18 am #1182025AnonymousGuest
- Total posts: 11,464
Hi Caroline, and welcome to Flying Solo
Setting up your business structure is one of the most important decisions you’ll ever make, and is especially crucial when doing business with friends or loved ones.
I have my fingers crossed that one of our resident experts will be able to give you some initial advice, but for a thorough assessment you and your partner may well need to consult an accountant.
Best of luck with it, however you decide to proceed,
JayneApril 22, 2015 at 11:40 pm #1182026MissSassyMember
- Total posts: 1,255
I recommend that you get legal advise regarding your structure. One of the members here http://www.legalvision.com.au will be able to help you. Partnerships can be tricky, you want to ensure you cover everything before you get started or too committed to the process.April 28, 2015 at 3:28 am #1182027MikeDavMember
- Total posts: 163
Make sure that you get the structure right from the beginning and have everything in writing. It is worth the investment in legal fees.April 28, 2015 at 4:06 am #1182028Xavier XiMember
- Total posts: 41
Consider having a chat with your accountant.April 28, 2015 at 4:06 am #1182029bb1Participant
- Total posts: 4,485
Get legal advise, but also ask yourself, why your friend/partner has changed their mind, if there is already issues before you start !!!!!!! well I have said enoughApril 28, 2015 at 5:40 am #1182030James MillarParticipant
- Total posts: 1,702
That arrangement sounds more like two separate businesses competing in the same space. If it was one business then you should both be working together to produce a joint profit.Helping build better businesses and better lives with expert financial and taxation advice. email@example.com www.360partners.com.au 03 9005 4900May 2, 2015 at 6:48 am #1182031HustlerMember
- Total posts: 3
Do you need each other for this to work?
Does yours and your partner’s skills complement each other?
If the answer is No, I would think long and hard about whether it is worth it to go in a partnership.
I have recently delayed starting my business because of the whole business structure part and also because my potential partner’s skills were too similar with mine. We would always want to work on the same things.
I ended up stopping the partnership before it started and now have full control of the business, which means I can take it in the direction I want.
That umbrella setup does seem like it rewards the person who does the most/best work. However if that’s the case, then why bother going through all that trouble? Why not just be competing sole traders to get started and eventually merge if need be. Sales is more important than all this structure stuff and your business doesn’t seem like it needs that structure to get going.
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