A partnership occurs automatically whenever two or more people set up in business together with a view to making a profit. A partnership occurs whether or not you want one to occur. The very act of the two of you setting up in business together forms a partnership. The terms of a partnership are set out in the 1890 Partnership Act, although the terms can be amended if you draw up a separate partnership agreement, or partnership deed, to regulate the partnership. This is strongly recommended.
You may wish to form a Limited Liability Partnership or LLP. These are like general partnerships but, as the name implies, they have limited liability. An LLP is a specific partnership formed under the Limited Liability Partnership Act 2000. It is in a way a half way house between a partnership and a company. It provides the members (which is what the partners are called) with limited liability. The LLP is a person at law and can employ staff and enter into contracts unlike a partnership. However, the members are taxed as individuals as in a partnership. As with partnerships, LLPs should have agreements to control the relationships between the members.
An LLP needs formal incorporation. You need to register the LLP at Companies House.
Our team of expert partnership lawyers can help you register an LLP and draft partnership agreements. Our colleagues at Ralli can help with all aspects of forming as new business - from property to employment, terms of business and intellectual property. Contact us for a free initial consultation.