If you are setting up in business together with a colleague, a popular company model is to set up a business partnership. Orwell Accountants in Ipswich can guide you through the process of starting up. We also provide all the expert accounting support that both new and established partnerships in Suffolk need.
As well as ordinary business partnerships, other options are to set up a Limited Partnership or Limited Liability Partnership. If you are considering which to choose, we can explain to you the advantages and disadvantages of these different models and help you to decide which type of partnership is best for you.
As an ordinary business partner, you will be classed as self-employed by HMRC. However, an advantage of working as a business partnership is that you are not working on your own, but have someone to share the responsibilities. Another advantage is that you do not have to publish annual accounts, as with some other types of business. Also, you don’t have to pay corporation tax, unlike a limited company, which may mean you have a lower overall tax bill.
However, there are also disadvantages. One is that all partners are “jointly and severally” liable for any partnership debts, so, if only one individual has assets, creditors could pursue them for all the money owed. Another is that it could be difficult to sell your partnership if you want to move on in the future. It could also be a disadvantage for some business partners that they are taxed personally on their share of the partnership’s profits, rather than the company being taxed separately.
