Overseas Partners

whatawaster

Hi,

My brother, who lives in Australia, and my Uncle, who lives in Ireland are starting a web design business, and want to do it as a partnership. Is this possible given that they are living in different countries. Also is it ok for the partnership to have two separate bank accounts in different countries?

Thank you

antoinolachtnai

It's possible, but:

1. What's the point? Why not hire someone down the road whom it is easier to communicate with? The time zones will drive them nuts.

2. There are a bunch of legal things required to establish the whole thing properly. You'd need to talk to your lawyers and accountants in both places.

whatawaster

antoinolachtnai wrote:

It's possible, but:

1. What's the point? Why not hire someone down the road whom it is easier to communicate with? The time zones will drive them nuts.

2. There are a bunch of legal things required to establish the whole thing properly. You'd need to talk to your lawyers and accountants in both places.

I don't understand what you mean by what's the point? Do you mean of setting it up at all? Communication isn't that big an issue - email and skype do the trick. It's mainly the bank account thing and any legalities. I actually thought there would be few legal complexities (except for taxation) with a partnership, bar registering the name and registering for tax.

antoinolachtnai

Well, someone has to sit up late to talk about the business to the other party.

Generally speaking partnerships are a bad way of doing business. You should incorporate as a limited company in one or other jurisdiction.

whatawaster

really?
The advice i've generally heard is that unless you reach a certain level of business, then sole traders or partnerships are more advisable as there are fewer legal requirements etc.

Also how would a director, who lives abroad, sign Financial statements, B1 forms etc.

They haven't ruled out a limited company I think the costs of setting one up are what is putting them off.

What are the advantages of a company in this case, or are there any?

Thanks for your help.

antoinolachtnai

The big issue is limited liability. Partners are jointly and severally liable for the crazy things their partners do. This could be anything. It could be the other party doing bad work or running up bills or it could be some accident which results in liability for the partnership.

Such an event is bad enough for any business, but if it results in partners losing their homes, even though they may be completely innocent of any involvement in whatever went wrong, then it is calamitous. Modern partnership law seems to governed to a great extent by a UK precedent involving redistribution of the equity in The Smiths.

The governance of partnerships is also pretty vague and hairy, because the regulations are often not specified. What happens if you need to bring new funds into the business for instance? There's no clear mechanism to do it.

You'd still need some sort of partnership agreement to add any sort of safety to the partnership route. This again will cost money, a lot more than the cost of incorporating.

The overhead of setting up a limited company is probably about eur 500 per year to start off with and a few hundred per year after that. The saving of being in a partnership is not that much. If you ever have to do any legal stuff with your partnership, you will lose all the saving instantly.

It's easy to sign documents remotely. just put them through the post. You will have to do some of this for partnerships as well. There is also an online service.

An alternative, which is really low-overhead and administratively more simple, is for both parties to operate as sole traders and then to contract one another in to do jobs. I would really consider doing this if they want to keep things informal. Most importantly, it is easy to unwind if things don't work out.

Of course if they are going to have assets in the business, maybe this won't work. But it is unlikely that they will.

a.

ircoha

IMO is is entirely disingenuous to the forum to post the same question in multiple places on this forum:mad: :mad: :mad:
eg
http://www.boards.ie/vbulletin/showthread.php?t=2055134258

where are the mods?

the Op's ID, as whatawaster, is very appropriate

whatawaster

ircoha wrote:

IMO is is entirely disingenuous to the forum to post the same question in multiple places on this forum:mad: :mad: :mad:
eg
http://www.boards.ie/vbulletin/showthread.php?t=2055134258

where are the mods?

the Op's ID, as whatawaster, is very appropriate

Easily angered aren't you. I originally posted in accounting, but was not getting any replies so I thought belatedly that maybe I should have posted it in business management. which I did. I set out to waste nobody's time, so I don't see why you're getting so anal about it.
But if the mods want to take me in i'll come quietly.


By the way thanks for your replies on the other forum, they were genuinely helpful.