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.