A partnership involves two or more individuals working together in business as partners, sharing the profits made and being individually liable for the debts of the business.

Benefits:

		easy record keeping
		profits of the business belong to the partners in accordance with the profit sharing agreement, subject to tax and national insurance
		can have employees
		Tax advantage compared with the alternative of a sole trader with an employee
		can change status to, for example, a limited company or limited liability partnership, at a later date if required

Responsibilities:

		preparation of annual accounts
		annual partnership and individual partners' tax returns to HM Revenue & Customs
		payment of tax by individual partners to HM Revenue & Customs
		payment of fixed rate (class 2) national insurance by each partner to HM Revenue & Customs
		payment of class 4 national insurance to HM Revenue & Customs, by each partner, based on annual profits

It is advisable that a written agreement is also drawn up between the partners, setting out the basis of profit sharing and responsibilities. This is known as 'The Partnership Agreement' or 'Partnership Deed'.

The debts of the partnership are joint and several, which basically means that a partner can be held liable for business debts even though they may have been caused by another partner.

If one of the partners leaves then the partnership must be dissolved, although the business can continue either as a new partnership or as a sole trader.