Setting up in business is a brave move and anyone who does it deserves good wishes for a successful venture ‘ but you can help with some forward thinking.
Obviously it will be mainly down to the efforts of the individuals if the venture succeeds or not, but before you even start you should be thinking about what type of ‘vehicle’ you need for the venture.
You can either set up from the start as a limited company, or as a partnership. If you take the limited company route, then the company has a life of its own and the shares can be sold or passed to heirs.
However, there are restrictions on the sale of shares in private (as opposed to public) companies, but all companies’ regulations set out what the procedures are in the event of a sale or death of shareholders.
If you take the partnership route then there are established ways of dealing with the death, retirement or even expulsion of partners.
It is absolutely essential you consult a solicitor who can draw up a partnership deed to deal with all these matters ‘ if you do not the partnership will be governed by a law passed over 100 years ago. It is still relevant today, but it was never intended to deal with some of the complex arrangements that parties now wish to enter into.
But the biggest problem of all is that without a partnership agreement, the business can be dissolved by either party on notice ‘ that could be disastrous and should be avoided at all costs.
Business is risky enough ‘ make sure that where you can, you cut down on leaving certain situations to chance.
Spend time talking to an accountant and a solicitor to get the structure of the business right at the start ‘ it will pay dividends in the long term.