What is a partnership

There are various types of partnership arrangements so you need to think carefully about what type will suit you best. 

Ordinary partnership – you and your partner(s) personally and jointly share responsibility for the running of the business.

Limited partnership – liability for debts can fall to specific partners rather than be shared equally (ie general partners, as opposed to limited partners, are responsible without limit for all debts and obligations of the firm).

Limited liability partnership (LLP) – this is more like a company where partners are not personally liable for debts and liabilities. An LLP is considered to be a corporate body that exists as a legal ‘person’ independently of the partners.

Scottish general partnership – if you are based in Scotland, you can make use of this type of partnership in which each partner acts as an agent and binds the partnership. The Scottish general partnership has a separate legal personality from the partners. However, every partner has unlimited liability to creditors for all the partnership’s debts.

Scottish limited partnership (SLP) – if you are based in Scotland, you can make use of this unique type of partnership. Partners are taxed on their share of partnership income and gains according to their profit-sharing ratios. These partnerships are commonly used in private equity and property investment fund structures.