Registering an ordinary partnership
An ordinary (general) partnership is not a separate legal entity and it has no legal existence independent of its partners who are jointly liable for all debts. In the UK partnership is the easiest way for two or more persons who are self employed to start and run business together.
Before setting up a partnership with other self employed persons and/or companies, partners who are individuals must register as self employed with HMRC.
As partnership does not enjoy limited liability protection, in the case of insolvency of the partnership, creditors may pursue any of the partners for the entire debt of the partnership.
Requirements to establish a partnership:
- All individual partners must be registered as self employed persons before entering a partnership.
- Partners raise funds for the business out of their own assets or by taking out loans.
- Although a written partnership agreement is not necessary, it is highly recommended to have one. The agreement should stipulate partners’ rights and responsibilities, profit sharing and the terms on which the partnership can be terminated.
- A partnership can choose its own business name or it trade under the names of its partners. If the trading name of a partnership does not contain the names of its partners, they must be displayed on the partnership website and stationary, including invoices, letters and business emails.
- All newly established partnerships must register with HMRC but there is no requirement to register ordinary partnerships with Companies House.