I'm interested in setting up a partnership of freelance translators, each working in different language combinations/specialisms. The idea is that the whole their marketing efforts will be greater than the sum of its parts (they each benefit mutually from each other's digital marketing/networking efforts but are not in competition with each other).
Is it possible to draw up an agreement whereby you only receive the income you generate, with a percentage (say 10%) going to a corporate partner who's in charge of coordinating everything?
e.g.
Freelancer A has a 20% share
Freelancer B has a 20% share
Freelancer C has a 20% share
Corporate partner Ltd has a 40% share
Freelancer A earns £1000 for a job, takes £900 and gives £100 to corporate partner Ltd
Freelancer B earns £2000 for a job, takes £1800 and gives £200 to the corporate partner Ltd
Freelancer C earns £500 for a job, takes £450 and gives £50 to the corporate partner Ltdc.
etc.
Is this possible?
Thanks
David
Replies (4)
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Oh dear. Well first up, partnerships don't have shares, so you can't split profits according to shares. You can split profits any way the partners agree, the only limitation being that you cannot have one partner receive a loss where other partners receive a profit, or vice versa.
It is essential that a legally binding and water-tight partnership agreement is entered into by all partners before starting, or any future disputes can get very messy and very expensive. There are also other important questions that need to be considered at startup. Having a corporate partner also complicates the reporting requirements.
So what you need to do is appoint an accountant to walk you through the process, and speak to a lawyer about a partnership agreement. Don't move until you've done both of those things, or you'll walk yourself into a quagmire.
Tax
... the only limitation being that you cannot have one partner receive a loss where other partners receive a profit, or vice versa.
I think Tim forgot to include the words "for tax purposes".