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October 11, 2019 at 11:20 am #999806IDS79Member
- Total posts: 1
Hi, A friend and myself have decided to go into a small business together, fairly low overheads to start with and opportunity to expand once client base built.
My question is as this is a low cost start up as we already have the tools to get us started and will use the income to expand tooling what is the best way to start up?
We have chosen a business name that we both agree on but we were wanting to structure under our own ABNs for now. So my question is, can we register a business name and use both of our ABNs or what would you recommend?
CheersOctober 11, 2019 at 10:02 pm #1221472Rowan@quaoticParticipant
- Total posts: 712
Not an answer to your questions but very important – please, please, please draw up a partnership contract between you, even if you are best friends and on the same page.
Put everything in it to minimise any misunderstandings, and to make sure you both understand what you are going to do and how you are going to handle dividing assets and debts if your business fails.
Also make sure that each of you writes down three deal breakers so you both know where each other stands when a stressful situation occurs.
Partnerships can work out great, but they can also turn into nasty break-ups. Planning and a contract is essential.October 11, 2019 at 11:30 pm #1221473MischelleMember
- Total posts: 805
I agree 100% with [USER=28171]@Rowan@quaotic[/USER] about the partnership agreement this is critical as it’s a tool to help both of you during good times and hard times. Link to example templates below:
As for the structure you must get an accountant, they will be your saving grace throughout your business life. I have had mine now for 25 years, and refer to him whenever needed.
I know some people think it’s expensive, but it actually not, it’s normally a set price to set it up for you, and trust me it will save you money by doing it right the first time.
Congratulation on your new adventure.
MischelleOctober 12, 2019 at 12:14 am #1221474bb1Participant
- Total posts: 4,472
I agree with [USER=28171]@Rowan@quaotic[/USER] 200%, but will add to that from what I have seen from 95% of people who were friends before going into business together, they are now bitter enemies. Think long and think very hard before you do it. A partnership agreement is a great idea, but it will only help with the monetary/business side of things. It wont fix the friendship issues.
Don’t take this as a don’t do it, but take it as a how good a friendship is it, and do you actually think you can work with this person. A bit like a marriage, you get on well before the marriage, but add a marriage certifacte / defacto certificate and look at how many of them fail.
Good luckOctober 12, 2019 at 12:31 am #1221475Paul – FS ConciergeModerator
- Total posts: 3,117
Ideally, you would have a partnership that could be a partnership, a partnership of Trusts, or a partnership of companies.
The partnership would have its own ABN.
What you do now can have a big bearing on the future so it would be advantageous to see an Accountant.
Good luck!October 13, 2019 at 7:04 am #1221476JacquiPryorMember
IDS79, post: 267459, member: 116105 wrote:We have chosen a business name that we both agree on but we were wanting to structure under our own ABNs for now. So my question is, can we register a business name and use both of our ABNs or what would you recommend?
- Total posts: 2,344
Short answer – no, I don’t think you can. A business name needs to be registered by a legal personality – so, you are each legal personalities as sole traders – when you come together, your legal personality is a partnership – so the partnership would need its own ABN and then apply to register business name accordingly.
And, I agree that you should have a partnership agreement in place, and that an accountant can help you determine what is the ‘best’ structure for you working together. Given you each have an ABN it suggests you have a separate business each already? An accountant can help determine what’s best from financial/tax perspective for your separate businesses versus ‘together’ business.
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