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Partnerships
By Heather Platts BA(Hons) | Updated August 26, 2007
This is a simple arrangement where 2 or more individuals can run and manage a business - with shared responsibility for business costs and risks. A partnership however, is not a legal entity outside of the people who form it - should a member of the partnership leave or die or go bankrupt - then the partnership has to dissolve to reform - however, the business can continue unhindered.
It is beneficial for would-be partnerships to talk through their business operation with a qualified accountant to agree and draw up a partnership. Partnerships are managed by the individuals within the group - who take responsibility for raising funds, running the business and sharing the profits.
Both the partnership and the individuals who make up the partnership have to annually make a self assessment tax return - and keep a record of income and expense for the business.
In Scotland - members of partnerships are severally liable for discharging debt - whereas in England, Wales and NI - each partner is equally liable - and so must jointly pay off any debt.
As with the Sole Trader, Partnerships profit is taxed as income - and as self employed each partner has to make NI contributions.
Topics: Setting-up a New Business |
