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Partnership

A partnership is a relatively straightforward way for two or more people to own and run a business together. Each partner would normally share in the decision making and share the profits of the business. However, each partner shares the responsibility for any debts the business runs up. A debt run up by one partner as part of the business will be the liability of all partners. If one of the partners dies, resigns or goes bankrupt the partnership will have to be dissolved. The business can however continue under a new partnership. The partnership needs to complete an annual self assessment as do each of the individual partners and keep records showing the partnership income and expenses. Tax is paid on the partners share of the profit. Each partner also has to pay Class 2 and 4 national insurance contributions on their share of the profits.

There is a variation of a partnership which is the limited liability partnership. The main difference is that for a limited liability partnership the liability is limited to the amount of money they have invested into the business and to any personal guarantees given to raise finance for the business. Limited liability partnerships must be registered with Companies House and there must be at least two designated members who have extra responsibilites placed on them. If there are fewer than two designated members then every members is deemed to be a designated member.
 

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