Should we set up our family business as a Partnership?
There are many reasons for not choosing a Partnership in your position, for instance:
- They are less tax efficient than Limited Companies
- Partners must pay Class 4 National Insurance
- All Partners are responsible for all debts
- Partnerships can result in disagreements if there is no legal agreement. (A Limited Liability Partnership could be better).
Here are some advantages to a Partnership over a Limited Company structure:
- Income can be apportioned more flexibly between Partners (but please get a legal agreement)
- The rules are less rigid than for Company dividends.
- Partners’ cars can be more easily used to save tax