Setting up a partnership company in UK

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Setting up a partnership company in UK 2017-08-01T11:30:06+00:00

Setting up a partnership company in the UK is often a good vehicle to enter where overseas individuals or entities are looking to create a light footprint by selecting an individual to represent their overseas based business. They could wish to ‘test the market’ of their product or service, by engaging a localised representative in the UK.

Setting up a partnership company in the UK can bring many advantages. Shared responsibility, ownership and ultimately profits. A partnership can be two or more individuals (or entities). Each partner is usually entitled to a percentage of the profits – depending on how much they have invested and what their percentage of a share is.

The partners are responsible for the debts incurred by the business.

Partnerships carry a certain proportion of risk – as they are personally liable regarding creditors, although this can be mitigated with the appropriate insurance policy, depending on the nature of the UK business.

The partners will also have a tax liability on the partnerships profits.

A partnership, in particular if one member is located in a different operating country than the remaining partners could disagree and the partnership could fall out.

As with any UK legal entity, there are advantages and disadvantages to a partnership.

  • Mutual support by fellow partners – including sharing of responsibilities, duties and tax liability.
  • Flexibility – a partnership could be easier to form, manage and run. Depending on the nature of the partnership, there could be less regulatory requirements involved.
  • Access to multi-disciplined skills – one partner may have a strong legal and financial background, whereas another may be more IT skilled.
  • Access to fellow partners allow for idea sharing, problem solving and an opportunity to execute a task more successfully.
  • More partners involved mean more individuals to “sign-off” action points.
  • Decision making can be slower – requiring multiple agreement(s).
  • General partnerships are subject to unlimited liability status – meaning each parner shares responsibility and risk.
  • Differences of personal aims – and firm-wide objectives.
  • Potential resentment when recognition is not appropriately given.
  • Under UK legislation, the partners submit their tax information by way of their personal tax return (Self Assessment). Each partner is required to register with HMRC as self-employed.

There are other alternatives to a partnership company in the UK – such as a Limited Company Registration. The shareholding of this could be owned partly by an overseas based entity, and an individual in the UK (or other jurisdiction).

Get in touch to begin setting up your UK Partnership