A partnership exists when two or more people carry on a business with a view to profit. It is not necessary to have a formal agreement in order to enter into a partnership however it is highly advisable that you do.
Partnerships benefit from having limited regulation and there is no requirement to prepare annual accounts for Companies House. Because of the flexibility offered by partnerships it is seen by many entrepreneurs as a good way to start a new enterprise however, because partnerships are subject to unlimited liability and the partners have to pay income tax on the profits of the partnership rather than corporation tax, many partnerships are often incorporated at a later stage.
As stated above partners to a partnership will pay income tax on the profits of the Partnership rather than corporation tax, the rates (2011/12) are as follows:
Personal Allowance of £7,475
Earnings up to £35,000 = 20%
Over £35,001 = 40%
Over £150,000 = 50%
For more information on entering into a partnership or incorporating your partnerhip please telephone 0800 999 8880.
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