A partnership as a form of business structure in UK

Partnership can be defined as:

• an association of two or more natural or legal persons engaged in a business enterprise in which the profits and losses are shared proportionally

• an association of two or more persons to carry on as co-owners a business for profit

Type of business. Partnership is a common form of structure for certain kinds of business such as accountants, solicitors and architects.

Members and management. Partnership needs to have at least 2 members and maximum of 12. There is an exemption on size for some types of firm, such as solicitors and accounts.

Partnership Agreement. The document which governs the partners' relations to each other and to the partnership is a Partnership Agreement

PA can set out, for example:

1) the duration of the partnership,

2) its name and business,

3) how profits, losses and running costs are to be shared,

4) how much capital each partner is contributes

5) what rules will apply to the capital,

6) what grounds will lead to a partner being expelled from the company,

7) what restrictions are imposed on partners

Liability. Generally, all the partners may be jointly and severally liable for all the debts of the business. Specificity of the distribution of the liability depends on provisions of PA and type of partnership and partner.

Type of partnerships and partner’s liability

• general partnership (is the most basic form of partnership)

Profits are usually split evenly among the partners; all partners have independent power to bind the business to contracts.

Each partner also has total liability, meaning they are personally responsible for all of the business's debts and legal obligations.

• limited liability partnership (LLP)

LLP has a legal identity separate from its members. A LLP operates like a general partnership (with all partners actively managing the business), however partners are not responsible for errors and omissions of their fellow partners.

Type of partners. There are several kind of partners: 1) general partners are owners of a partnership who share its profits and the liability among themselves, 2) limited partners are a partners whom liability for one another's actions is limited (it is possible for all the partners except one to be a limited partner), 3) sleeping partners, whom have no management authority, but have a share in the business and liable only for the capital they have invested.