An Architect’s decision to set up their own practice may be influenced by many different reasons. Some of these include: the desire to control one’s own professional destiny; the motivation to provide service to society and to clients; the wish to specialize in a certain field of architecture or market niche; an offer to form a partnership or purchase shares from an established firm or colleague; the award of a significant commission, either through a competition or from a business associate; a means for creating work or employment. Establishing and maintaining an architectural practice demands certain skills. The owner(s) of an architectural practice must be able to: develop and market a firm’s value proposition, attract clients, and sell services; negotiate terms and compensation in client-architect agreements; hire and manage qualified staff; perform the full range of architectural services efficiently and effectively; It is a legal, collective entity authorized by legal authorities to act as an individual business unit.  A private company whose architects are legally responsible for its debts only to the extent of the amount of capital they invested Characteristics: Limited liability It is not easy to setup; equity and legal procedures to follow Limited companies are subject to corporate income tax on their profits have shareholders who own shares in the company Limited companies have perpetual existence; they can continue to operate even if ownership changes. An unincorporated relationship between architects for carrying out architectural A partnership is effectively the same a sole proprietor except that the equity is owned by two or more individuals. Each partner is liable jointly with the others for all the debts and obligations incurred. A partner’s liability can extend to all of their business and personal assets. An unincorporated relationship between architects for carrying out architectural A partnership is effectively the same a sole proprietor except that the equity is owned by two or more individuals. Each partner is liable jointly with the others for all the debts and obligations incurred. A partner’s liability can extend to all of their business and personal assets.

1. AR 326: PROFESSIONAL
PRACTICE II
LECTURE 8: Forms of Practice

2.  An Architect’s decision to set up their own practice may be influenced
by many different reasons. Some of these include:
• the desire to control one’s own professional destiny;
• the motivation to provide service to society and to clients;
• the wish to specialize in a certain field of architecture or market
niche;
• an offer to form a partnership or purchase shares from an
established firm or colleague;
• the award of a significant commission, either through a competition
or from a business associate;
• a means for creating work or employment.
ESTABLISHING A PRACTICE

3.  Anyone considering such a change should be aware from the outset
that establishing an architectural practice has serious implications
for one’s personal, professional and business life. The individual
should carefully weigh all the implications before embarking on this
course.

4.  Establishing and maintaining an architectural practice demands
certain skills. The owner(s) of an architectural practice must be able
to:
•develop and market a firm’s value proposition, attract clients, and
sell services;
•negotiate terms and compensation in client-architect agreements;
•hire and manage qualified staff;
•perform the full range of architectural services efficiently and
effectively;

5. •work with the construction industry and administer contracts;
•operate profitably and provide stability to the practice.

6. FORMS OF PRACTICE
 Forms of practice can also be termed as the types of ownership
 Several factors affect the type of ownership, including
relationships with professional colleagues, tax implications, and
exposure of personal assets.
 It is important for Architects to seek legal and accounting advice
before structuring a practice, as well as confirm ownership
regulations with the legal authorities.
 There are 3 main forms of practice
• Sole proprietorship
• Partnerships
• Limited Companies

7. Sole Proprietorship
 A sole proprietor is a single, unincorporated owner of an
architectural practice. This architect has full personal control
over all aspects of the practice. A sole proprietor can range from
someone with a small, home-based office practice to an
architect who employs many professionals and
paraprofessionals.
 Characteristics include:
•Easy setup – less paperwork, less capital
•No legal structure
•Simplified decision making
•Unlimited liability:
•Can cease to exist easily.

8. Partnership
 An unincorporated relationship between architects for carrying
out architectural
 A partnership is effectively the same a sole proprietor except
that the equity is owned by two or more individuals.
 Each partner is liable jointly with the others for all
the debts and obligations incurred. A partner’s liability can
extend to all of their business and personal assets.

9. Partnership
 Characteristics:
• There are few formalities to setting up a partnership.
• The financial resource of more than one person is likely to be
better than those of a sole proprietorship.
• Responsibility can be shared
• There are good opportunities of expansion due to the ability
of collective resources from all the partners
• Partnerships have unlimited liability
• One troublesome partner could cause difficulties for the
other partners , as the action of one partner makes the
others liable

10. Limited Company
 It is a legal, collective entity authorized by legal authorities to act as
an individual business unit.
 A private company whose architects are legally responsible for
its debts only to the extent of the amount of capital they invested
 Characteristics:
• Limited liability
• It is not easy to setup; equity and legal procedures to follow
• Limited companies are subject to corporate income tax
on their profits
• have shareholders who own shares in the company
• Limited companies have perpetual existence; they can
continue to operate even if ownership changes.