While sole trader and limited company are the most commonly chosen business structures for new UK founders, partnerships represent a third option that is relevant when two or more people want to go into business together. Understanding what a partnership involves — and how it differs from the alternatives — is useful for any founder considering a joint venture or shared business arrangement.
A partnership is a business structure in which two or more individuals share ownership and responsibility for a business. In a standard partnership, each partner is personally liable for the debts and obligations of the business, including those incurred by the other partners. A Limited Liability Partnership (LLP) provides a hybrid structure with some of the liability protections of a limited company. Partnerships do not need to be registered with Companies House in the way limited companies do, though LLPs must be.
Partnerships are governed by the terms of a partnership agreement, and operating without one is legally possible but strongly inadvisable — disputes between partners are significantly more difficult to resolve without a written agreement in place. The choice between a general partnership, LLP, or limited company depends on the nature of the venture and the liability exposure involved. Our guide to business structures for co-founders covers the key considerations.