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There are around 500,000 businesses currently trading as Partnerships in the UK. Partnerships are not as common as Sole Proprietorships or Limited Companies however; they make up around 10% of all UK businesses.

What is a Business Partnership?

A partnership is defined as two or more ‘persons’ in business together with a view to making profits. A partner doesn't need to be an actual person. For example, a limited company counts as a ‘legal person’, and can also be a partner in a partnership.

In a Partnership, you run a business as a self-employed individual however, all partners share responsibility for the business. You can share the profits of the partnership however you decide and each partner pays tax on their share of the profits.

Partnership Debts

The individual partners are personally liable for any debts that the business is unable to pay. In the event a Partnership ceases to trade, the individual members must account for any outstanding liabilities.

The debt solutions available to the individual business partners are the same as those available to sole traders. The additional solution available to partners is a Partnership Voluntary Arrangement (PVA).

Dealing with partnership debts can be very complex; if you are a Partner in a business with debts please call 0800 1804 933 for specific advice or read more about partnership debt solutions>

Joint & Several Liability

Within a partnership, each individual partner will be deemed to be jointly and severally liable for the partnership debts.

In the event the partnership can’t pay its debts, the creditors will be free to pursue each of the individual partners for 100% of the debt, until they are repaid in full. If the business had 2 partners and 1 is unable to repay anything, the creditor will pursue the other partner for the full debt.

What is a Limited Liability Partnership (LLP)?

In many ways, an LLP is similar to a Limited Company. Crucially, the partners in a limited liability partnership aren’t personally liable for business debts. The partners’ liability is limited to the amount of money they invest in the business.

In relation to tax, an LLP is similar to a non-limited partnership. The LLP pays no Corporation Tax or Capital Gains Tax. Instead, LLP income and/or gains are distributed gross to the partners as self-employed persons, rather than as PAYE employees.

The debt solutions available to a Limited Liability Partnership (LLP) are the same as those available to Limited Companies. If you are a member of an LLP and need advice relating to business debts call 0800 1804 933 or read more about the available debt solutions>

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Anderson Brookes Ltd

Anderson Brookes Ltd provides advice to individuals, business owners and company directors that are struggling with debt. Anderson Brookes Ltd is Authorised and Regulated by the Financial Conduct Authority; our registration number is 669796. You can confirm our details on the FCA website www.fca.org.uk. Anderson Brookes Ltd is a limited company registered in England and Wales; company registration number is 4213701. You can read more about the services provided by Anderson Brookes Ltd by visiting OUR SERVICES. A printed copy of our Initial Disclosure Document will be provided to you before any Instructions are accepted from you. You can request a copy at any time by calling 01204 255 051. Some of the services provided by Anderson Brookes Ltd are not regulated by the Financial Conduct Authority.

Anderson Brookes Insolvency Practitioners Ltd

Anderson Brookes Insolvency Practitioners Ltd is a limited company registered in England and Wales; company registration number is 10324159. Registered office address is 4th Floor, Churchgate House, Bolton, Lancashire BL1 1HL. Brendan P Hogan is licensed to act as an Insolvency Practitioner in the UK by the Insolvency Practitioners Association. Licence Number 101680.