Traditional Partnership – What is it?
What is a traditional partnership?
A partnership will be implied by the law when two or more people are in a business relationship together with the view to making a profit. In a business partnership, you’re running a business as a self-employed individual but with the other partners. You share responsibility for the business jointly. You share the profits between the partners and each partner pays tax on their share of the profits. A partnership is not a separate legal entity and so it is a matter of fact whether a partnership exists. Partnerships are often extensions of the sole trader model. Where there is no express agreement (whether written or oral), the Partnership Act 1890 will imply certain terms into a partnership. It is, however, advisable to have a written agreement. Partnerships offer a flexible business model without the administrative and regulatory demands of a limited liability company.