Opening a business with your spouse or a person, you share a romantic relationship with can be exciting. Your significant other could be the best person to be with as you establish your new venture. But while the thought of sharing all the joys and pains of having a new company with your romantic partner sounds fun, it is also necessary to think about all the legal practices that you need to secure as you register a business.
These things are necessary to protect you, and the company in case your relationship ends unexpectedly. Find out what you and your beloved should prepare for when launching your joint business venture.
Tip #1: Choose the Right Business Structure
Before you register a business, you and your significant other must decide which business structure to work on for your upcoming venture.
By choosing the right business structure, you will have a solid foundation for the company you want to launch with your spouse. The two most relevant business structures that you may choose from are partnership structure and company structure.
To help you decide, here is a breakdown of both business structures:
Partnership – Under this business structure, you and the other party must have a Partnership Agreement. It includes a detailed outline of your main concerns for the business and the arrangement of your business relationship with your spouse/romantic partner. It must also mention the duration of your business partnership and details about the proceedings in case one of you decides to leave the partnership.
Besides the partnership agreement, you need to register your business, file for an Australian Business Number (ABN), and tax filing number (TFN) if you choose this business structure.
Company – This business structure lets you and your spouse/partner serve as shareholders of the company. It means that both of you will be the business’s legal owners, and it let you appoint people to run it and make all the company’s decisions. You may also choose between you and your significant other to act as the company director.
To know more about the duties and responsibilities of a shareholder and the director for small business companies, you may visit the Australian Securities and Investments Commission (ASIC) website. They offered a detailed explanation of the differences between the two.
Tip #2: Prepare Legal Agreements
Once you decide on the right business structure for you, you need to come up with the necessary agreement before beginning the process for registering your business. If you decide to have a partnership, both of you must sign a Partnership Agreement. If you choose to open a company, then you must come up with a Shareholders Agreement.
Both legal agreements address the purpose of the business, the process of making decisions, the list of duties and responsibilities as co-founders, and the possible course of action when ending the agreement. But the Shareholders Agreement must also indicate how you want to allocate the shares of the company and the number of shares that you may issue and sell.
You may seek help from a business registration service provider to provide you with the proper template for both legally binding agreements.
After learning all these tips, you and your spouse/partner will have more peace of mind knowing that both of you are protected as you enter a business partnership. It will protect your individual assets in case of a relationship breakdown in the future.