A partnership is a relatively simple and flexible way for two or more people to own and run a profit-making business together. Social enterprises and other non-profit making organisations should not use this business structure.
Unlike the shareholders in a limited company, the members of a general partnership have no financial protection if the business runs into trouble as each partner is responsible for the debts of the partnership as a whole. This means that each partner’s personal assets may be at risk if the business fails.
Disputes between partners can cause difficulties, and the partnership may have to be dissolved if one of its members resigns or dies. It is possible to resolve these issues in advance by drawing up a deed of partnership, but you will need to pay a solicitor to do this.
The officers of a partnership.
Any group of people that wants to set up a profit-making business together can form a partnership. However, if a member of a partnership is under the age of 18, he or she cannot be legally bound by the terms of the partnership agreement.
It is also possible for companies to be members of a partnership, in which case they will have tax and reporting obligations on top of those of individual partners. Individual partners must register as self-employed with HM Revenue & Customs.
How many officers can a partnership have?
Forming a partnership allows two or more people to set up in business together, sharing profits, managing burdens and risks.
The rights and responsibilities of the partnership’s officers.
The officers of a partnership normally share in both the responsibilities of running the business and the profits or losses that it makes. However, their precise rights and responsibilities will depend on: what type of partner they are and any partnership agreement or “deed of partnership” that they have entered into.