The Roadmap to your Financial Future

Depending on the structure of the firm, employment status can be a contentious issue, especially for junior partners who do not always have a guaranteed profit share and may have minimal voting rights.

Your capital contribution is a significant investment in your professional future, which should be treated as any other investment; you need to believe in the strategy and ethos you are buying into and expect a return on your investment.

The basis for your future partnership will be set out in the firm’s partnership agreement, this agreement forms the contract between you and your firm. It sets out the relationship between the individual partners and their obligations and contributions.

Compliance with laws and regulations such as the General Data Protection Regulation (GDPR) (Regulation (EU) 2016/679), anti-money laundering laws and other regulatory requirements (such as the SRA, FCA, RICS etc) are all crucial, and you must be confident you and your firm are managing the responsibilities appropriately.

As a self-employed individual, there is an element of personal financial management required at a business level – you will be personally accountable for chargeable hours, recovery of your own time and the hours of your staff as well as overall productivity.

Most partnerships appoint the firm’s external accountant to look after the annual tax returns of partners, and as such, you would be required to authorise them to act on your behalf in order that any tax issues that arise or payments that become due are dealt with in a timely manner. If this is not the case, you will be required to prepare and submit your tax return personally or appoint your own advisor to assist.

You may decide to operate in a partnership or LLP or through a corporate entity, whereby you are a director of the company. If so, there will be additional reporting obligations for the corporate entity once incorporated, such as statutory accounts, Companies House obligations such as the annual confirmation statement, and corporate tax computations and returns for each accounting period

If your firm pays for your annual tax return, in the event of your exit from the partnership or the firm’s liquidation, you will become personally liable for the cost of your tax return. Documentation required is outlined here

One area that can dramatically improve the stability and success of a firm is developing and managing an effective working capital strategy. Cash-flow and working capital represent two critical measures of a firm’s ability to meet its financial obligations and is the life blood of every business.

Buying a home; marriage, cohabitation and divorce, children, and retirement planning – key considerations to make for a variety of life events.

Offset mortgages, ISA allowances, maximising interest on cash deposits, pensions, and investment options – find out more about being tax efficient with your finances.

Leaving a partnership for reasons other than retirement or death will need to be negotiated, with differing processes for contentious and non-contentious situations. Most partnership agreements will dictate matters such as notice period and restrictive covenants, as well as rights and liabilities on leaving.

The succession we are considering here is that of a partner who, having served his or her clients for many years, now finds it is time to hand them to a new custodian. With careful preparation and planning, succession cannot only be a means of exit but also a great opportunity for the next generation of partners.

Mergers and acquisitions and restructuring or liquidation are alternative exit options that are discussed within this section.