Set Up Partnership – TheCompanyWarehouse.Co.Uk

Setting Up a Partnership

Sometimes in life, two or more people with a profitable idea decide to set up a business together. Looking for flexibility and freedom they may well choose to set up a partnership. In a partnership, generally speaking, the partners are equally involved in the running and management of the business, as well as providing an equal share of their own finances for the purposes of investment. They are deemed to be self employed and must be registered as such with HM Revenue and Customs. For information on the advantages and disadvantages of setting up a partnertship, take a look at our blog.

There are two main options to those looking to set up a partnership business rather than a limited company.

“Ordinary Partnership ” – Setting up a partnership of this kind, the partners share the risks if the business gets into financial difficulty. The set up process is simple and the business can be easily managed with an equal share in the workload and decision making.
“Limited Liability Partnerships” (LLP’s) – Similar in nature to that of a limited company, LLP’s are given the protection of limited liability, so setting up a partnership like this allows the partners to be more financially secure.

How To Set Up a Partnership

Although it is easier to set up a partnership than most other forms of business, there are still a few legal criteria that need to be satisfied in order to set up a partnership. It is recommend that those looking to set up a partnership draw up a deed of partnership in order to protect themselves (and the other partners) in times of un-resolvable dispute among them or dissolution of the partnership business.

Setting up a partnership can be carried out by any human being of over 18 years of age. There must be at least two partners, but it is also possible for a company to be a partner in a partnership business.

As mentioned, the set up of a partnership is carried out using the funds of the partners. Partners then share the liability (depending on the partnership type), the profits and the say in how the business is run. The specific requirements placed on the partners can be laid down and amended by the deed of partnership (also known as the partnership agreement) which is drawn up when setting up a partnership.

There can be three types of partners – General partners, sleeping/dormant partners and companies.

General Partners – invest in the set up of a partnership, are involved in its running and take a share in profits/loss.

Sleeping/Dormant partners – invest in the set up of a partnership, take a share of the profits but have no say in how the business is run.

Companies – Directors of companies can be partners in a partnership, with the same rights and responsibilities as general partners.

Setting Up a Partnership – The Tax and Finances

Newly set up partnerships will require each partner to submit their own self assessment each year. They must also register as self employed and be subject to the relevant taxes. Partners will pay income tax on their share of any profits that the business makes. Companies who are partners in a partnership will be required to pay corporation tax on their profit share. In some cases that forming a limited company is more appealing in tax terms, but the set up of limited liability partnerships offers more flexibility.

Setting Up a Partnership – VAT Registration

If a partnership is going to have a turnover exceeding £68,000 then it will be required to register for VAT. See our blog article on vat registration for details of the levels and rates of VAT your partnership might be involved with and see our page about registering a company for VAT to see why in some cases, voluntary VAT registration is a good idea.

Setting Up a Partnership – PAYE Registration

Once you get going you may well think about taking on extra employees to help run your partnership business. To this end you will need to register for PAYE. Take advantage of our payroll service. Get your employees properly registered and pay them correctly with ease. Our service takes all the hassle away from you at a low cost.

Set Up Specifics

In order to get the most out of partnerships and gain some more protection, many partnerships set up what is known as a “deed of partnership” (also known as a “partnership agreement”) this deed governs how the partnership is to be run and also covers things like the handling of disputes between the partners if they arise and how the partnership is to be handled if for any reason it has to be dissolved.

Setting Up Partnership With TheCompanyWarehouse.Co.Uk

If you are looking to set up partnership in the form of a limited liability partnership, then our service is perfect for you. We provide two distinct services in regards to setting up an LLP.

Partnership Registration – if you already have a partnership agreement set up then we can provide you with a service to simply get your limited liability partnership registered with Companies House.

Full Partnership Set Up – Our comprehensive service includes the drafting of a bespoke partnership agreement if you have certain specific requirements in setting up your partnership that you wish to be covered by the agreement.

We have helped set up a number of partnerships over the years and have a good working knowledge of both what is required and what people generally want in order to function properly as a partnership business.

Contact our specialist partnership set up team on 0800 0828 727.