Creating Partnerships – Forum Question
IT Accountant guys, how come you never advise creating partnerships for contractors? After all most of you are partners. There are partners in other professions like lawyers, dentists, doctors etc.
Why not in IT?
The big problem that contractors have is that their company has no residual value when they are not working for it. They cannot sell their companies or share in the partnership like you guys can. They are not creating long term value for themselves.
All the Government legislation is aimed at close companies, i.e. those with 5 people in them or less.
Has it been done before in IT?
Yes, CMG started out as a partnership and was so for a very long time.
The big IT consultancies are often partnerships.
So why not IT contractors?
Why is it never advised by their accountants?
I think that accountants are catering to the short term needs of contractors, i.e to pay less tax, but not to the longer term need, i.e. to make them rich by giving them something of residual value that they can sell at a later date.
The first accountant that realises that could make a fortune. Let’s see who is first.