Where two or more persons carry on business together with a view to making a profit then a partnership can be said to exist. There are no formal procedures to form the partnership and no legal requirement for anything to be in writing, though naturally, this is highly advisable. Therefore, it is relatively easy to set up and run a partnership.
In the absence of anything in writing to the contrary, the Partnership Act 1890 will apply; all profits and assets of the partnership are equally divisible amongst the partners and the partners shall similarly be jointly and severally liable for all the debts and obligations incurred by the Partnership. The important point to bear in mind here is that a partnership vehicle is not a separate legal entity in law. Consequently, this joint and several liability is not affected by any private agreement or apportionment between the partners.
It is also important to note that the liability of partners in a partnership is unlimited and as a partner you are personally responsible for any debts that the business as a whole incurs.
Additionally, subject to certain conditions, a partnership can contain no more than 20 partners.
The treatment for tax purposes of a partnership is that each partner is treated as self-employed and must file a personal tax return each financial year.
Steen Rosenfalck - Partner