This form of business association arises when (at least two) people carry on profit-oriented activities together. Partners are jointly liable because they share the property. Under the Limited Partnerships Act 1907, it is possible to have “sleeping partners” in limited partnerships, who will not be liable beyond their investments. A partnership does not normally pay income tax but the information from the tax return is combined with the personal income of the partners to determine the overall tax liability.
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Target accountants will deal with the provision of partnership accounts and the preparation of a partnership income tax return. It is crucial for its well being that the partnership understands it’s own financial performance to make decisions regarding the future direction of the business.
Limited Liability Partnerships
LLPs were introduced in 2001 to offer large professional firms trading as partnerships the chance to have limited liability like a company (with the same same asset protection limitations). For tax purposes limited liability partnerships are treated as partnerships. This is the main difference from being a shareholder in a company: each partner will be a separate entity only from a legal (not tax) point of view.