Partnership or Company????

[Scott Miller]

Hi Team,
I am about to go into a couple of IP deals with another person.We have a good trust of each other and have agreed to get some kind of legal structure going forward so to protect against any unforeseen ugly outcomes.
So here is the question.

The accountant says a 'partnership' is the way to go.!

The solicitor says a 'company' is the way to go.!

Although both have there point of view I am after what you guys think?

Not only are we after some legal protection but also require a simple structure to work within. IE decision making is not ham stringed by the structure itself ( over bearing paperwork etc.).

Cheers Scott

[CJ]

Looking at the wind down of the structure, I would say partnership.

If you need the limited liability of a company, the entity that ownes your share of the partnership can be your 100% company.

[Josko]

I wonder if there would be any issues if you needed to exit from the partnership, what implications are there on changing ownership of the title, are there any costs involved.

I would suggest a Company structure would be more flexible in managing these type of issues. Especially if you want to add a Trust into the equation later down the road.

[No Regrets]

My 2cents....I wouldnt go near a partnership in this situation. From a protection point of view forming a company is a clear winner. With the partnership you can be held liable for all debts of your partner and there will be no seperation of your personal 'matters' and your IPs.

Although the company has a few more setup and admin costs/time I belive this far outweighs the disadvantages of a partnership.

What reason has your accountant given for a partnership?

[No Regrets]

further to my previous post, I have just been talking to my accountant and his charges wouldnt be any different for either structure. (about 750 pa)

[cantthinkofanickname]

I personaly would go for a company as partnerships leave you open to your partners creditors even if you didnt know about the debitthey incured. If they do not want a co you could set one up and have that as their partner there by giving your personal assets seperation from the partner.

[CJ]

Partnerships are used by the biggest companies in the world. They way they elimiate the liability issue most have referred to is to use SPV (special purpose vehicles). These in reality are just companies set up by each of the partners (one each) to act as the partners. Some even use joint ventures (JV) which have even less legal standing than partnerships.

Ask your accountant why he is recommending a partnership - if he is recommmending something and doesn't have a good reason, get a new accountant. He may have a good reason but the lawyers reason may take precendent, that is fine, at least he is thinking. If you are paying their fees, get them to explain it to you - that is what they are there for.