This structure is not quite as simple as being a sole trader and in some ways it is riskier than being a sole trader. A partnership has the benefit that you can operate the business with another person but by doing so, it creates the risk that you will be responsible for liabilities that were authorised by the other partner. Whenever entering into a partnership it is very important to have a clear written agreement on matters including:
- How much capital you are each contributing
- How you are to share any profits or losses
- What happens if someone wants to exit the partnership
- Who can sign cheques and operate the bank account
- How often can a partner be absent from the business
- What happens if a partner dies or if a new person wants to enter the partnership.