Second only to sole traders / proprietors, partnerships have been around for centuries and in 1890, the Government passed the Partnership Act 1890.
For our purposes, we need to look at Section 1 which defines a partnership as “the relation which subsists between persons carrying on a business in common with a view of profit”
A partnership will always involve at least 2 people and they could even been husband and wife. There is no limit to the number of partners that can be partners of the same business. Indeed, one of the most successful UK partnerships has over 84,000 partners – The John Lewis Partnership!
In days gone by, accountants used to advise sole traders to progress towards such partnerships as a natural progression for their businesses. The current view now is quite different and whilst we believe that there is reasons for partnerships to exist, there are many reasons why they may not be appropriate in the circumstances.
If you are intending to create a partnership, we would strongly recommend that you see a suitably Qualified Accountant to ensure that you avoid the pitfalls and penalties that await for the unprepared!
If you are intending to create a partnership or you recently have created one, why not use this opportunity to call us on 01252 375 466 for a FREE consultation where we can discuss many issues that you need to be aware of such as:
- Informing HM Revenue and Customs
- Partnership agreements
- Partners liabilities
- Employing staff
- Construction industry regulations for partnership involved in building trade
- VAT registration
Because of the nature of partnership, failure to structure the details or missing any of the points above could result is penalties and liabilities that could cost you £000’s, even if you were not the partner responsible for the action or even inaction!