A partnership is a type of business that has 2 or more owners. They decide to set up and run a business between them.
Partnerships are often found in businesses that provide a professional service, such as lawyers, doctors and accountancy practices. They can sometimes be identified by the name of the business. For example, ‘Kowalski & Davies Accountancy’ would probably be an accountancy business with two partners with the surnames Kowalski and Davies.
In a partnership, the owners agree a set of rules. These are outlined in a document called a deed of partnership. As an example, this document may specify how profits are allocated, what percentage of the business each person owns, their roles and responsibilities, and the percentage of any business debts that each person would have to pay. The owners in a partnership pay income tax on their earnings.
Some partnerships have limited liability, which separates the owners from the legal entity of the business. This is covered by the Limited Liability Partnerships Act 2000.