What is the biggest mistake you can do in a business partnership? 

To just trust a partner..... Yes you should trust your partner in business but there is a fine line that needs to be understood.

No room for trust and friendship in partnerships. Get it in writing -

anything less will almost certainly end in tears, court and hardship

In an age where it is becoming more difficult to do business, take proper advice from

experts, well trained and qualified business people. It is far cheaper to get the advice upfront than to

go headlong into a partnership, only to find it is the wrong vehicle for you. A

handshake does stand up in court, but you are guaranteed more protection from a

partnership contract drawn up by a lawyer. Make sure that each partner`s individual

financial structure from an income tax and estate duty point of view is secure (you

don`t want to be going into a partnership with someone who has just gone bang) Draw

up a workable financial formula for the dissolution of the partnership. Partnerships are

based on trust but you can save yourself a lot of heartache if you set them up with the

idea that they might not always be rosy.

The first shoot of trouble often occur because partnerships are frequently divided

between one person who has full autonomy over finance while the other provides the

creative clout. “Partnerships are” he says “creatures of trust”

The court archives are full of business partnerships that devolve around genesis of

good will and end on a sour note. To a large extent, the business partnership has been

susperseded by the CC, which is governed by the Close Corporation Act and is a

separate legal entity with virtually the same legal standing as a private company and

where the corporate veil shields personal liability. However, there are cases where

partnerships are more attractive than a close corporations. It depends very much on

the nature of the business, the risk involved and the projected profit and loss profile.

Partnerships, if properly set up, can be easier to dissolve and can also be very

advantageous from a tax point of view.

The essentials necessary for the creation of a partnership are:

* Each of the partners brings something into the partnership, whether it is money,

   labour or skill.

* That the business should be carried on for the joint benefit of the parties.

* That the object should be to make a profit.

One of the problems that arises is without written contracts. Although the handshake

agreement is recognized legally, it is better to get things in writing. It is wise to

seek professional advice from a lawyer when drawing up a partnership contract. Such

a contract must pay particular attention to finances, stipulating each partner`s initial

financial contribution and entitlement to profits. A partnership contract must also

include legal precautions for the dissolution of the partnership.

It is more difficult to choose a partner than a spouse. “When they do work they can be

magic” The best advice is to go into all partnerships with the idea that you might

wake up one day and hate your partner.

Wherever you have got a partnership agreement, try to work into the partnership a

workable financial formula for its dissolution. In the end, it is this that will save

disillusion.

                              

Close corporation versus partnership

* The CC is a separate legal entity while a partnership is not.

* Membership of a CC is limited to 10, there can be up to 20 partners in a partnership.

* The member`s liability in a CC is limited. In a partnership the partners assume full  

    liability.

* The CC is considered a separate taxpayer. In a partnership the partners are liable for

   tax.

* A CC is taxed at company tax rates, whereas in a partnership the profits are taxed in

   the partners hands at each partner`s marginal tax rate.

* Losses retained within the CC cannot be offset against the member`s income. A

   partner`s share of the partnership loss can be offset against his/her other income.

* The member`s salaries are deductible for tax purposes, unlike the salaries of   

   partners.       

For Further information or advise please contact us by 

Email: frik.christien@gmail.com

Phone: Frik 0825568368

           Elmien 074 373 1888

website: www.businessexperts.co.za

We have been Business brokers for more that 19 years and have a range of businesses for sale.

If you want to sell your business contact us!

Everything will be handled confidential and professional.

We also do liquor license application.

New Application 

Transfer of a liquor license

Appointment of managers

Occasional or catering permits

For any liquor related business visit: www.liquorlicensing.co.za

Or contact Frik 082 55 68368

                 Elmien 074 373 1888

All liquor related advise are free.