Overview
A partnership allows two or more people to run a business together, jointly make a profit and divide the proceeds in an agreed way. You should have a partnership deed describing the terms of your arrangements, although not having one does not prove that you are not in partnership; how you run your business and how outsiders perceive it, determines whether you are working as a legal partnership.
In dentistry, partnerships tend to be profit-sharing or expense-sharing. Each arrangement will have its own obligations and responsibilities; no two partnerships are the same. You should understand the implications of working in partnership and jointly owning and running a practice, the legal status of your working arrangement and the safeguards that you can introduce. You should seek professional legal advice from a solicitor experienced in dental practice and partnership law.
The alternative model of running the practice through a limited liability partnership (LLP) is covered in BDA advice Companies and limited liability partnerships.
Key learning points
This advice provides an overview of working in a partnership and will help you to understand:
- The value of having a partnership deed to avoid the default rules of the Partnership Act 1890 being applied and the essential terms that you should include
- Working in partnership and retaining your personal income but sharing common expenses
- Considerations for finding the right partner and who is eligible to be a partner
- The financial requirements for accounts and the implications for taxation
- The default rules for ending a partnership and the alternative provisions that you should consider including
- When you need to review or update your partnership agreement.
