Help please, starting off and confused

snickerpuss

Hello all,

Myself and a friend are considering setting up a business (a small business) and frankly, I'm a tad confused.

Firstly, I was going to register the name, here I have to select the type of business name. I can choose:
Individual
Partnership
Body corporate.

I'm not sure what these entail. There are two of us. It would be totally equal. I thought I could just register the name myself.

Then I need to ask what what type of business it would be best to register the business as? If I register the name as a partnership and make it a ltd company does that make any sense? Can we be a ltd partnership?
I've read quite a bit but it's hard to tell what to do. Never thought it would be so confusing (before actually starting!)


Any ideas/help greatly appreciated!

ImDave

As you have found, when registering a business name you have three options. An individual is what is commonly known as a sole trader. A partnership is a a business with two or more persons up to a limit (can't remember what it is!), and body corporate is for when a private or public limited company is registering an additional business name to trade under. For yourself, individual or partnership is the way to go. If you're not too worried about the formalities of it all, I would just go with individual. It doesn't really make a difference unless you are going limited, which there is probably no need to do given the fact you are only starting off.

Best of luck with it all!

thecleverone

If you're not too worried about the formalities of it all, I would just go with individual.

As there's two of them, a partnership is the way to go.

information

Individual - one person
Partnership - a group of people
Body corporate. - a legal entity ie Ltd company

EI-DAV wrote:

It doesn't really make a difference unless you are going limited

Of course it makes a difference, if he registered it as an individual:
His friend would have no rights over the business
His friend would be trading illegally

snickerpuss

Okay so looks like a partnership it is.
Cheers!

Also - I'm a girl.

rummy

If you are establishing yourself as a partnership (2 people up to 20 people) you still need to register the name of the business - http://www.cro.ie/en/business-registration-business-name.aspx. The name must meet certain criteria i.e. it cannot be used by someone else; can't be blasphemous etc. Paper copy costs €40 though only €20 if you do it online.

I would also recommend that you write a partnership deed so as to identify the responsibilities of each partner and what happens to the partnership should someone want to leave or if someone dies etc

Good luck!

amen

unless you are an accountant/solicitor/doctor etc then a partnership might not be the best option

I think you really need to see a professional about this before making any decisions. Once you have created your partnership/company etc they become legal entities and you have certain responsibilities

what type of business are you going to set up?

you need to have rules governing what to do if one partner dies, gets fed up of the business etc

thecleverone

Once you have created your partnership/company etc they become legal entities and you have certain responsibilities

A partnership is not a separate legal entity. A company yes.

antoinolachtnai

It is extremely easy to establish a partnership.

In fact it is dangeriously easily.

Establishing a partnership of this type has profound and dangerous implications. You could lose all your assets as the result of no fault or action of your own.

Do not enter a partnership arrangement without legal advice and financial/accounting advice.

The lawyers will almost certainly advise you not to enter a partnership.

If you incorporate a limited company, the way it would work is that you and your friend would own equal numbers of shares.

Think a little bit about this 'completely equal' thing. Will it really work in practice? Can both parties bring equal skill and funds to the company? Who will be in charge?

You may be so small for this not to be an issue yet. I would suggest that if you do not want to go to the trouble of incorporating a limited company, that you and your friend start out operating as sole traders who subcontract to one another. Then in a few months, you can see how things are going and what the most sensible way to structure the business is. The one problem with this is that if you have assets together (such as a brand name) it will be hard to manage this. But this may not arise.

ImDave

antoinolachtnai wrote: »

It is extremely easy to establish a partnership.

In fact it is dangeriously easily.

Establishing a partnership of this type has profound and dangerous implications. You could lose all your assets as the result of no fault or action of your own.

Do not enter a partnership arrangement without legal advice and financial/accounting advice.

The lawyers will almost certainly advise you not to enter a partnership.

If you incorporate a limited company, the way it would work is that you and your friend would own equal numbers of shares.

Think a little bit about this 'completely equal' thing. Will it really work in practice? Can both parties bring equal skill and funds to the company? Who will be in charge?

You may be so small for this not to be an issue yet. I would suggest that if you do not want to go to the trouble of incorporating a limited company, that you and your friend start out operating as sole traders who subcontract to one another. Then in a few months, you can see how things are going and what the most sensible way to structure the business is. The one problem with this is that if you have assets together (such as a brand name) it will be hard to manage this. But this may not arise.

Agreed. I recall a lecturer saying that partnerships have x hundred percent (can't remember the figure) higher chances of failure compared to an individual, simply down to disagreement within the business between partners. Whenever you mix money, decisions and friends, things can get ugly very fast.

antoinolachtnai

Yes, but the commercial reasons for not going into business with somebody are different from the legal reasons for not establishing a partnership structure.

Be sure to look at:

http://www.startingabusinessinireland.com/formlegstruct.htm

However, this account is deficient in one respect. It does not warn you to get professional legal and/or financial advice before establishing a partnership, something you should definitely do.

snickerpuss

Thanks for all of that, some interesting stuff to think about.

I'm not sure that either of us would (or could) go into business without the other at this point since it's a bit of a joint venture. I need her expertise on some stuff, and ditto. I'm also very aware how dodgy partnerships can get and I've tried to make sure we are on the same page.
I will be getting some professional advice before jumping in anyway.

more tea vicar

If you are absolute beginners, buy a book on starting a business in ireland for all the technical references to the cro and tax office, legal side, marketing etc.

Toe dip to start, we are in recession so do not expect to succeed as most new businesses fail in the first year or so anyway, regardless of recession. Have a go and when you probably fail or fallout, maybe have another few goes, keep learning, and in the future ye may get good at it all.

snickerpuss

Yep, we're taking it slow, not rushing into anything. At the moment just getting information together and seeing how it goes.

lanod2407

I set up as a sole trader recently and the advice I got from my Accountant was that I should consider a Ltd company if I had (a) a high level of risk to be covered regarding the business offering, or (b) complex tax issues to be addressed. As I was simply setting up a business consulting practice I elected to go down the sole trader route. The costs and admin associated with a Ltd entity can be considerable - especially the time required to make various returns, etc.

I'm now setting up an online business that may need to have a higher degree of risk covered, and the company may well trade abroad in the next couple of years, so a Ltd entity may well be required.

Regarding partnerships - be really careful that you both have an agreed, signed document between you regarding what you're going to do, your goals, how the work will be split, how profits are to be paid, what money will be invested, etc. etc. and especially what will happen if one or both of you decide to move on from the business - many a friendship flounders on the rough seas of partnership trading ........ for your own sake do not believe that your friendship is the one that is unbreakable.

I thought that "only other people" were involved in car accidents until early this morning when an idiot came around a bend on the wrong side of the road!!!! Could never happen to me - NOT!!!

Hope this helps.

Forsaken1

snickerpuss wrote: »

Yep, we're taking it slow, not rushing into anything. At the moment just getting information together and seeing how it goes.

Not too bad with 2 people as you have equal rights. But where it gets messy is if someone wants to bring in a third individual. This leads to much more complicated issues on decisions and disputes.

Ps. If you need a Website or Web Application / databases let me know...

Good luck.

snickerpuss

lanod2407 wrote: »

I thought that "only other people" were involved in car accidents until early this morning when an idiot came around a bend on the wrong side of the road!!!! Could never happen to me - NOT!!!

Coincidentally that happened to us the other week, ended up in a bush in Wicklow. A sign?

Forsaken - will keep that in mind, cheers.

Lorelei

Partnership as you have probably gathered by now, very dodge definitely need contracts and legal advice. Ltd con be costly have a number of advantages that really kick in when your turnover starts to get into the lower tax bracket, only my own personal opinion.
If you are trading under your own names you don't need to register with the CRO. I would go along with the 2 separate entities as if there is a fall out then you can easily go your own way. I am in the cleaning business and work this way with 4 other small companies we each have our own areas of expertise and a type of business one doesnt like another does, we simply pass the business onto each other. There is trust involved e.g. I need to trust the glass cleaner not to "nick" my carpet cleaning clients and vice versa of course if anyone does break the trust cycle then they are out. It seems to work and we have all become friends, whereas if we had started as friends and gone into partnership it might not have worked. The problem with friends is that we automatically assume they know what we mean, not always the case. Also with friends we dont pull them up quick enough if we feel they are not pulling their weight. All those little niggles we put up with from our mates and even family we dont when its a business partnership, thats why so many fail. Having tried it a couple of times I would never again enter a partnership with a friend.

snickerpuss

I know people want us to operate as two separate companies but I don't know how this would work. We're baking stuff. We couldn't both set up two companies and two kitchens approved by health board and two separate names and all that.
I don't see how we can avoid a partnership unless one of us backs out. And both of us want to do it.

antoinolachtnai

You're investing money at the outset to set up a kitchen. That's a completely different thing. I take it you going to lease/buy a place, and invest equal amounts of money in this. You will probably need toborrow money.

I think the best structure for this might be a limited company with equal shares for each of you. There needs to be a shareholder's agreement which provides for how one or other of you would buy the other out in case of a dispute.

Because you are going to build up tangible assets in the company, you really need to be clear the legalities before you start doing anything.

Written legal and possibly accounting advice is definitely in order to get all this together. Realistically, this is going to cost thousands of euros if you aren't familiar with the issues.

You also need to find some sort of friend or mentor who can advise you about the issues.