Partnerships

In a partnership two or more people share the costs, risks and responsibilities of the business.  They also share the profits as per a partnership agreement that should be drawn up before trading commences.

A partnership is a relatively simple and flexible way for two or more people to be in business together, however as with a sole trader, there is no protection if the business fails.

Setting up:  Partners need to register as self-employed.

Liability: If the business fails, then the owners are fully responsible for all the business' debts.

Management: The partner's share responsibility for controlling the business. A maximum of 20 partners is allowed.

Finance: More often than not, partners' personal money.

Profits:  All profits are shared between the partners (as agreed within the 'deed of partnership').

Taxes Etc.: Self employed status. Even if the partner's don't draw on the profits they are still taxed. Losses can be offset against tax on other income.

Continuity: The partnership is dissolved if one of the partners dies, resigns, or becomes bankrupt.