Chris Thorpe considers the ‘pros’ and ‘cons’ of partnerships and companies for operating a trade or profession.
The decision whether to operate a trade or profession as a company or partnership may well involve many factors; tax is likely to be high up on the list.
The term ‘partnership’ is a wide one, and it is worth looking at the different types.
Types of partnerships
A ‘general’ partnership is essentially two or more sole traders coming together with a view to making a profit, but within a set of their own laws (i.e., partnership law, which imposes obligations and joint and several liability on the partners, via the Partnership Act 1890) and a set of tax interpretations; for tax purposes, a general partnership is transparent, with each partner being taxed on their profit or capital gain share (per Statement
