There are many reasons for not choosing a Partnership in your position, for instance:
- They are generally less tax efficient than Limited Companies;
- Partners must pay Class 4 National Insurance;
- All Partners are jointly 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 for paying owners varying proportions of profit are less rigid than for Company dividends;
- Partners’ cars can be more easily used to save tax – no need for a P11D.