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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