A Partnership, also open to overseas investors, consists of two or more people running a business together, sharing risks, responsibilities, costs and profits as agreed.
There are two types of partnership: An Ordinary Partnership or a Limited Liability type of Partnership.
An Ordinary Partnership is very similar to the Sole Trader except in a partnership two or more self-employed people share in the decision-making, risks, costs and obligations of the business. Partners are advised to draw up a written agreement between themselves.
Although a simple and flexible organisation, the partnership involves risks. Irrespective of the shares, each partner is personally responsible for all the debts of the business. Unlike a limited company, a partnership does not have a legal entity of its own. The partnership will be dissolved if one of the partners resigns, dies or becomes bankrupt.
Setting up requirements and obligations of an Ordinary Partnership
The setting up requirements and obligations of an Ordinary Partnership are the same as for the Sole Trader. Additionally in a partnership, the annual self-assessment return must also be made for the partnership along with the returns for each partner.
LIMITED LIABILITY PARTNERSHIP (LLP)
A Limited Liability Partnership (LLP) is similar to an Ordinary Partnership. The main difference between the two is the limitation of liability in LLP to the amount of money the partners have invested in or guaranteed for the business. The LLP enjoys the flexibility and taxation method of ordinary partnerships without their open-ended liability risk. The LLP is a legal entity.
Set up requirements and obligations for an Ordinary Partnership (LLP)
– LLP’s must satisfy all requirements and meet all obligations of an Ordinary Partnership
– LLp’s must be registered at Companies House by completing the Incorporation Document Form LLP2 showing the partnership’s name, registered office address, full name, address and date of birth of each partner, plus the names of the designated members. Finally; a statement of compliance signed by a solicitor or a proposed member. To download this form, click on Incorporation Form LLP2
– LLP’s must file accounts with Companies House
– Returns must be made to Companies House each year. To download the form used for this return, click on Form LLP363
– There must be at least two designated members managing the partnership and responsibilities are similar to those of company directors.
– Companies House Fees: The standard fee for Limited Liability Partnership registration is £20. For same day incorporation, the service costs £50.
SEARCHING FOR A BUSINESS PARTNER
To view a list of advertised business partnerships or propose a partnership on the Chamber web site, visit the section on Business Partner Search.