Set up a business partnership

Setting up

In a partnership, you and your partner (or partners) personally share responsibility for your business. This includes:

  • any losses your business makes
  • bills for things you buy for your business, like stock or equipment

Partners share the business’s profits, and each partner pays tax on their share.

A partner does not have to be an actual person. For example, a limited company counts as a ‘legal person’ and can also be a partner.

What you need to do

When you set up a business partnership you need to:

The ‘nominated partner’ is responsible for managing the partnership’s tax returns and keeping business records.

There are different rules for limited partnerships and limited liability partnerships (LLPs).

  1. Step 1 Check if setting up a limited company is right for you

    1. Check what a private limited company is

    How you set up your business depends on what sort of work you do. It can also affect the way you pay tax and get funding.

    Check if you should set up as one of the following instead:

    1. Get help deciding how to set up your business
  2. Step 2 Choose a name

  3. Step 3 Choose directors and a company secretary

    You must appoint a director but you do not have to appoint a company secretary.

    1. Find out what directors are responsible for
    2. Check who can be a director or company secretary
  4. Step 4 Decide who the shareholders or guarantors are

  5. and Identify people with significant control (PSC) over your company

    For example, anyone with voting rights or more than 25% of the shares.

    1. Find out what counts as a PSC
  6. Step 5 Prepare documents agreeing how to run your company

    You need to prepare a 'memorandum of association' and 'articles of association'.

    1. Find out how to create a memorandum and articles of association
  7. Step 6 Check what records you'll need to keep

  8. Step 7 Register your company

    You'll need to register an official address and choose a SIC code - this identifies what your company does.

    1. Check the rules for company addresses
    2. Check what your SIC code is
    3. Register your company with Companies House

    Most people can register for Corporation Tax at the same time as registering with Companies House.

    If you cannot, register separately with HM Revenue and Customs (HMRC) after you’ve registered your company with Companies House.

    1. Register with HMRC for Corporation Tax