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A partnership is a business relationship based on an agreement between two or more people. It’s important to have the partnership agreement properly drafted by a lawyer, as this can save a lot of problems if there’s a dispute between partners or other issues such as debt or unpaid tax.
In an Unlimited Partnership, two or more individuals simply come together to form a business. The accounting and tax aspects are relatively straightforward, but each partner will be personally liable if the business incurs debts.
To overcome this last drawback, there’s an alternative: the LLP (Limited Liability Partnership). The LLP is a corporate body with its own identity, separate from the individual members. The LLP itself is liable for debts incurred in running the business, giving individual members more protection from liability than in an Unlimited Partnership.
In both versions, individuals’ income from the business is treated as personal income, which is taxed at the appropriate rate.
Although it has the advantage of helping protect you from business debt, there are also disadvantages to an LLP. It’s more complex, and has to be set up with formal legal documents and registered at Companies House.
We’ll discuss your business circumstances and advise you on which type of partnership is most suitable for you (or whether it would be better to set up a limited company). We can help with any aspect of partnership agreements, including:
Sometimes we are asked to help when one partner does not want to be responsible for another partner’s debt, which they are not protected from under conventional partnership law. We can draft partnership agreements to include protection for individual partners.
You can be reassured by our experience and reputation for giving sound, helpful advice on partnerships and LLPs. You can trust us to listen and understand what matters most to you and your business, and respond with a pragmatic, personal service that’s tailored around your specific commercial needs.