This week we continue our series on starting a business in Jamaica by examining PARTNERSHIPS. A partnership is two or more persons carrying on a business in common with a view to profit. When choosing partners, ensure that they are persons who are trustworthy and will act in the best interest of his/ her fellow partner(s).
The Partnership agreement:
The signing of a partnership agreement is crucial as it will provide guidelines for the firm. This agreement should clearly identify partners’ rights, duties and responsibilities and address matters such as retirement and succession policies. In this agreement, partners should indicate the type of partnership.
Types of partners include:
- General partners – these are most common,
- Salary partners – they have no share in the firm as an equity partner but is still held out as a partner and so can still be liable.
- Dormant or sleeping partners – takes no active part in the management of the business
- Corporate partners – a registered company can be a partner once there is nothing in express or implied terms that preclude membership.
To register a partnership, you must submit The Business Registration Form (BRF 1) to the Companies Office of Jamaica and the registration fee is $2,500 for 2 to 5 partners and $5,000 for 6 to 20 partners.
Advantages of a partnership over a company:
- Absence of formalities- the formation and dissolution of a partnership is simpler.
- Lower cost for registration and privacy of financial matters
- No requirement to file annual returns
Disadvantages of a partnership over a company:
- The major disadvantage is that there is no separate legal entity that can be sued and held liable for the debts and losses of the partners.
- As with a sole trader, partners are personally liable, to their last dollar, jointly and severely, for all partnership debts, losses, & damage arising from a wrongful act or omission of any partner acting in the ordinary course of the business of the firm.
Abi-Gaye White-Thomas B.A., LL.B (Hons)