What does it mean to be a partnership?
In a business partnership, the partners both own and control the business, whilst operating as self-employed in their own right.
A partnership can be created verbally or in writing. There is no requirement to register with Companies House, and although preferable, you do not have to have a formal partnership agreement drawn up.
Taxation rules for a partnership are quite simple, and a tax return can be completed online. The partners will also individually need to register for self-assessment, which they can also do online.
Unless a formal partnership agreement has been drawn up, a partnership business can easily be dissolved at any time: this gives each partner the freedom to choose to leave if they wish to.
A major advantage of trading as a partnership is that they can share knowledge, contacts, and different tasks and bring specialist experience.
In a business partnership, the profits of the business are shared between the partners.
A business partnership has no independent legal existence distinct from the partners, and unless there is a partnership agreement with alternative provisions in place, it can be dissolved on the death or resignation of one of the partners.
Just like a sole trade, who is responsible for any profit or losses, all partners are jointly and severally liable for profit and debt. Putting this simply in the event of a business running into trouble, personal assets could become liable to seizure. If one partner has no assets or funds but the other partner does, then that partner will be liable to settle the debts of the partnership.
Partnerships can appear to be temporary enterprises, whereas a limited company which has to file accounts with Companies House, and can therefore be scrutinized, might appear to have less risk.
Finally, there are many other advantages and disadvantages of a partnership, and you should always consider all the options before you commit.