In a partnership, two or more people share the risks, costs, and responsibilities of being in business.

Marriotts aim to help partnerships achieve business objectives, increase profits and maximise the wealth of each partner.

Partners are self-employed and each takes a share of the profits. Usually, each partner shares in the decision-making and is personally responsible for any debts that the business runs up.

Unlike a limited company, a partnership has no legal existence distinct from the partners themselves. If one of the partners resigns, dies or goes bankrupt, the partnership must be dissolved but the business may not need to cease.

A partnership is a relatively simple and flexible way for two or more people to own and run a business together. However, partners do not enjoy any protection if the business fails.

Each partner needs to register as self-employed. It's a good idea to draw up a written agreement between the partners. For further advice, consult an accountant or solicitor.Partners themselves usually manage the business, though they can delegate responsibilities to employees.

Partners raise money for the business out of their own assets, and/or with loans. It's possible to have 'sleeping' partners who contribute money to the business but are not involved in running it.

The partnership itself and each individual partner must make annual self-assessment returns to HM Revenue & Customs (HMRC). The partnership must keep records showing business income and expenses.

Each partner takes a share of the profits. As partners are self-employed, they are taxed on their share of the profits. Each partner needs to pay fixed-rate Class 2 National Insurance contributions (NICs) and Class 4 NICs. 

In England, Wales and Northern Ireland, partners are jointly liable for debts owed by the partnership and so are equally responsible for paying off the whole debt. They are not severally liable, which would mean each partner is responsible for paying off the entire debt. Partners in Scotland are both jointly and severally liable.

To learn more about setting up a partnership for your business call Marriotts on 01277 236200 or email info@marriottsassociates.com