FAQs

• A partnership is a traditional structure where partners run the business together and are personally liable for its debts.
• An LLP (Limited Liability Partnership) is a separate legal entity with limited liability protection for its members.

In practice:
If a business fails owing £200,000:

• In a partnership, partners may have to pay this personally.
• In an LLP, members are generally protected unless they’ve given personal guarantees.

• In a partnership, partners have unlimited joint and several liability—each partner can be personally responsible for all debts.
• In an LLP, liability is usually limited to the member’s investment.

In practice:
If one partner makes a serious business error (e.g. negligent advice), other partners in a traditional partnership may still be personally liable. In an LLP, the risk is usually ring-fenced.

Both partnerships and LLPs are generally tax transparent in the UK, but there are some practical differences:

• Profits are taxed on individuals, not the business itself
• Members/partners pay: 
  
  • Income tax on profits
  • National Insurance contributions (NICs)

However:

• LLP members are often treated as self-employed, but some may be taxed as employees under “salaried member rules”
• Partnerships tend to have simpler tax treatment

In practice:
If the business makes £100,000 profit:

• In both structures, the individuals are taxed personally on their share
• But in an LLP, if a member is effectively acting like an employee (fixed pay, little risk), they may be taxed differently

Yes:

• Partnerships: 
  
  • Minimal filing requirements
  • More privacy
• LLPs: 
  
  • Must register with Companies House
  • Must file annual accounts (publicly available)
  • Ongoing compliance obligations

In practice:
An LLP’s financial information may be visible publicly, whereas a traditional partnership’s accounts are generally private.

This depends on your priorities:

• Choose a partnership if you want simplicity and privacy
• Choose an LLP if you want limited liability protection and a more formal structure

In practice:
A small family-run business may prefer a partnership for simplicity, whereas a professional services firm (e.g. architects or consultants) often uses an LLP to reduce personal risk.