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Partnerships Explained

In a general partnership the partners are personally liable for business debts and obligations. Creditors can claim a partner’s personal assets to meet any debts, so partners lack protection if the business fails. In a partnership, each partner is jointly and severally liable for debts – so each partner could end up being responsible for the whole of any debt, even if those debts were taken on by others in the partnership or a partner who leaves. That’ll be most risky if your ordinary partnership takes on debts and you’re in business with someone with few or no personal assets.

Partnerships – What are your responsibilities?

  • Each partner is entitled to an equal share of the partnership profits (and losses), regardless of the amount of capital they’ve contributed.
  • Most decisions will be made on the basis of a simple majority of the partners; and Details of partnership income and expenditure
  • Records of the share of profits and losses attributed to each partner VAT records (if registered for VAT)
  • PAYE records (if the business employs staff)

Benefits of trading as a Partnership

Less formal with fewer legal obligations

One of the main advantages of a partnership business is the lack of formality compared with managing a limited company.

More Partners, More Capital

The more partners there are, the more money there may be available from their combined resources to invest into the business, which can help to fuel growth. Together, their borrowing capacity is also likely to be greater.

Privacy

Compared to a limited company, the affairs of a partnership business can be kept confidential by the partners. By contrast, in a limited company certain documents are available for public inspection at Companies House.

Prices starting from £495

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Registration

How we can help you

Registration

If you start working in a partnership you must register the partnership with HMRC and each individual must register to complete a self-assessment tax return. This is something we can assist you with.

Tax Obligations

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Tax Obligations

- Report each partners share of partnership profits (or losses) alongside other income via a Self Assessment tax return
- Pay Class 2 and Class 4 National Insurance Contributions

Dedicated Accountant

How we can help you

Dedicated Accountant

We will be your dedicated accountant, offering unlimited advice to support all partners.

Learn the basics

News & Helpguides

For the eager-to-learn business owners, we have a bank of helpful learning guides and information in our resource centre for you to add to your toolkit.

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