Choosing the right business structure for you.
Partnership (also known as “Common-law partnerships”)
The advantages and disadvantages of setting up as a partnership are very similar to those of a Sole Trader. For example there is no need to register with Companies House, and any profits you make are subject to income tax and National Insurance contributions (even if you reinvest the profits in your business). The key difference is that while a Sole Trader is by definition a single individual, a partnership is set up jointly between two or more individuals.
In this model, each partner owns the business, and because the business and the owners are legally indistinct, each owner shares liability for any debts the business incurs. This means that if one partner cannot cover his share of any debts, the other partner(s) will be liable for them.
As with setting up as a Sole Trader, setting up as a partnership requires registration with HMRC, VAT registration and filing of an annual Tax Return. Accounts Direct can assist with all of these processes if you decide a partnership is the appropriate business structure for you, and we can even help you open a suitable bank account.
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