Set up a business partnership
A business partnership is created when two or more people decide to go into business together.
There are three types of partnership:
- 'ordinary' partnerships
- limited partnerships
- limited liability partnerships (LLPs)
Setting up a business partnership
In a partnership, you and your partner (or partners) personally share responsibility for your business. This includes:
- any losses your business makes
- bills for things you buy for your business, like stock or equipment
Partners share the business's profits, and each partner pays tax on their share.
A partner doesn't have to be an actual person. For example, a limited company counts as a 'legal person' and can also be a partner - see set up a limited company.
What you need to do
When you set up a business partnership you need to:
- choose a name
- choose a 'nominated partner'
- register with HM Revenue and Customs (HMRC)
The 'nominated partner' is responsible for managing the partnership's tax returns and keeping business records.
There are different rules for limited partnerships and limited liability partnerships (LLPs) - see GOV.UK guidance on set up and run a limited liability partnership and set up and run a limited partnership.
Naming your partnership
You can trade under your own names, or you can choose another name for your business. You don't need to register your name.
You must include all the partners' names and the business name (if you have one) on official paperwork, for example invoices and letters.
Business partnership names must not:
- include 'limited', 'Ltd', 'limited liability partnership, 'LLP', 'public limited company' or 'plc'
- be offensive
- be the same as an existing trade mark - see company name and trade mark checker
Your name also can't contain a 'sensitive' word or expression, or suggest a connection with government or local authorities, unless you get permission. For example, to use 'Accredited' in your company's name, you need permission from the Department for Business, Energy and Industrial Strategy (BEIS).
GOV.UK outlines which words you need permission to use, and who from.
You'll need to register your name as a trade mark if you want to stop people from trading under your business name.
Register your business partnership
You must register your partnership for Self Assessment with HM Revenue and Customs (HMRC) if you're the 'nominated partner'. This means you're responsible for sending the partnership tax return.
The other partners need to register separately.
All partners also need to send their own tax returns as individuals - GOV.UK has further information on Self Assessment tax returns.
You must register by 5 October in your business's second tax year, or you could be charged a penalty. For example, if you started a partnership or became a partner during the 2017 to 2018 tax year, you must register before 5 October 2018.
Other ways to register
Registering for VAT
You must also register for VAT with if your VAT taxable turnover is more than £85,000. You can choose to register if it's below this, for example to reclaim VAT on business supplies.
Another option is to appoint an agent to deal with HMRC on your behalf - GOV.UK provides guidance on what you need to do to appoint an agent to deal with HMRC on your behalf.
Checklist: set up a business partnership
To set up a business partnership there are several things you must do. Make sure that you:
- Register the business for Self Assessment with HM Revenue & Customs (HMRC) so they can set up your tax and National Insurance records. If your business partnership is a limited liability partnership (LLP), you must register the business for Self Assessment with HMRC and you must also register separately as an individual. See understanding Self Assessment and your tax return.
- If your business partnership is a limited liability partnership (LLP), you must register your business with Companies House. See starting a company or partnership.
- Obtain any planning permission that you may need from your local council. Find your local council in Northern Ireland.
- Obtain any licences or permits that you may need. Use the licence finder tool to find out what licences or permits your business may require.
- Contact the Land and Property Services to find out whether you need to pay business rates. See business rates: the basics.
- Contact HMRC to register for VAT if you expect to have turnover of more than £85,000 a year. See registering for VAT.
- Register with HMRC for PAYE (Pay As You Earn) if you employ staff. See registering and getting started with PAYE.
- Register with HMRC if you are a contractor or subcontractor in the construction industry. See contractors and the Construction Industry Scheme.
- Set up a financial record-keeping system. See set up a basic record-keeping system.
- Put your name on all your business stationery, including letters, invoices, receipts and cheques. See name your business.
- Set terms and conditions for your customers, such as when your invoices are to be paid. See ensure customers pay you on time.
- Ensure all business insurance requirements are in place. See business insurance: the basics.
It's worth remembering that this is just a start. As you continue in business, you may have other legal and tax issues to bear in mind.