Partnerships as a business model are very similar as a sole trader, except that they are used when more than one person wishes to own the business.

Each partner pays income tax, through the Self Assessment system, as well as Class 2 and Class 4 National Insurance – and the business itself pays VAT if it has registered. Each partners entitlement to profit i.e. profit share and also the assets of the business is determined by the partners and it is best practice to record this in a formal partnership agreement.

With Partnerships each partner has joint and several liability for the debts of the Partnership, so that if one partner cannot pay their share of any business debts, the debt will fall on the other partners.