Working Through a Partnership or LLP

This Content Was Last Updated on March 10, 2024 by Jessica Garbett


A partnership is a more complex choice of trading structure, but can offer some advantages.  Our guide to Choice of Structure for Yoga Teachers comments more on this.


What is a Partnership

  • As the name implies its two or more people working together, probably with a trading name. This may suit two or more Yoga Teachers co-owning a small studio, or a married couple teaching together.
  • The business is synonymous with its owners at law, compared to a company where there is a separate legal identity. It is best thought of as a number of Sole Traders sharing a business name and accounting.


How is a Partnership formed

  • A partnership can be formed with very minimal paperwork, potentially just registration with HMRC.
  • A partnership will normally want a separate business bank account.
  • Apart from a married/civil partnership couple teaching together, in most instances a partnership agreement is a sensible precaution to have, as this sets out how the business is run.


Taxation of a Partnership

  • The tax position for a partner in a partnership is almost identical to that of a sole trader.
  • Partnership accounts are prepared on similar principles to a sole trader, and with the same rules regarding expenses.
  • A Partnership Tax Return is submitted which splits the profits between partners.
  • Each partner then enters their share of profits in their personal tax return and the calculation of Tax and NI on the profit share is identical as for a Sole Trader.


Limited Liability Partnerships

These are a hybrid between Companies and Partnerships.

  • In terms of tax, they are treated as a partnership following the rules and process above.
  • However they are registered at Companies House and afford the partners Limited Liability.  The price for this is a more complex accounting regime, adherence to many aspects of company law, and a requirement to file information publicly including accounts and confirmation statements.
  • Generally people either have a conventional partnership to keep things simple, or a limited company for the full benefits that provides – LLPs are possibly best reserved for specialist situations, although we can certainly assist in setting them up and administering them.