“Ordinary” Partnerships
When two or more self-employed people come together to form a partnership in order to run a business, they are deemed to share the profits, debts and generally, an equal say in how the business is managed. This starts with the financing of the business. Partners are expected to fund the business out of their own personal finances or loans.
The business as an entity, is deemed to be with the partners and not separate as it is with a limited company. This means that not only are the partners liable for any debt that the business accrues, but if one of the partners dies or retires, then the partnership must be dissolved.
Partners, being self-employed, are expected to carry out an annual self-assessment for tax returns on behalf of themselves, as well as the business.
Limited Liability Partnerships
Although a partnership is a suitable choice for most entrepreneurs, being easy to form, run and manage, the potential liability can be off putting. Due to this fact, the slightly more appealing “Limited Liability Partnership” is another option for business formation.
In much the same way as with an ordinary partnership, there must be at least two partners, each of them registered as self employed. Although, being self-employed, the partners are still expected to pay tax on themselves and the business (submitting the correct accounts each year), there are some other differences. They are still expected to fund the business, but because of the limited liability they will only ever be liable up-to the amount that they initially invested and no more. Which is a far more enticing prospect. The profits are still shared equally, as is the risk, but only up-to what they first put into the business. Because of the limited liability nature of the business, an LLP is seen by the law as a separate corporate entity. Therefore, unlike an ordinary partnership, a limited liability partnership will continue to exist beyond the life or involvement of its members. The law governing LLP’s is covered by the Limited Liability Partnerships Act 2000. One of the requirements of an LLP, before registration is production of a “Partnership Agreement”.
Partnerships, selling goods or services, will be expected to charge and register for VAT. If you intend to run your business using employee’s you will need to setup a payroll system to pay them correctly and make the proper National Insurance and Tax deductions and contributions to HM Revenue & Customs. Our systems will ease the process, freeing you up the time you will need to run your business successfully and compete well in the marketplace.
As part of starting an LLP, there is a requirement for registration with Companies House. At The Company Warehouse, we know what is required in order to register correctly. As well as registering Limited Companies, we also offer specialist services to help people register Limited Liability Partnerships. We can help turn your business idea into a success, with a wealth of services including logo and corporate identity design, domain name registration and website design and much, much more!
For FREE guidance, contact our helpful team on Freephone – 0800 0828 727
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