How to set up a general (ordinary) partnership in the UK

Liability: Partners personally share responsibility for the business's losses and bills.

Minimum capital: None

1. 1

   Agree who the partners are

   Partners can be individuals or limited companies. Agree capital, roles and how decisions are made. A written partnership agreement is strongly advisable (profit shares, drawings, what happens if a partner leaves).

2. 2

   Choose a business name

   Use your own names or a business name; there is no name registration. It must not include 'limited', 'Ltd', 'LLP' or 'plc', be offensive or copy a trade mark, and sensitive words need permission. Show all partners' names on invoices and letters.

3. 3

   Choose a nominated partner

   The nominated partner manages the partnership's tax returns and keeps the business records.

4. 4

   Register the partnership for Self Assessment

   The nominated partner registers the partnership with HMRC online (or on form SA400). HMRC says to register by 5 October in the business's second tax year, or you could be charged a penalty.

5. 5

   Each partner registers separately

   Every other partner registers for Self Assessment themselves (online or form SA401) and files an individual tax return as well as the partnership return.

6. 6

   Open a partnership bank account and keep records

   Keep business and personal money apart and keep records so the nominated partner can complete the partnership return and each partner their own return.

7. 7

   Register for VAT if needed

   Register the partnership for VAT if taxable turnover is over £90,000; voluntary registration is allowed below that, for example to reclaim VAT on purchases.

• Partnership agreement (recommended; not filed anywhere)
• Each partner's name, address, date of birth and National Insurance number
• Business name, if different from the partners' names
• Business start date and description of the trade
• Partnership UTR (for the nominated partner) and each partner's own UTR once registered

• The nominated partner completes the partnership tax return after 5 April; each partner then includes their share in their own Self Assessment return.
• Pay each partner's Self Assessment bill by 31 January (second payment on account by 31 July if applicable).
• Register the partnership for VAT if taxable turnover passes £90,000.
• Register as an employer with HMRC before the first payday if you take on staff.
• Keep the partnership agreement under review when partners join or leave.
• Consider an LLP or limited company if you want limited liability.

• Partnership tax return filed by the nominated partner, and every partner's own return, by the usual Self Assessment deadlines (31 January online; 31 October on paper). A late partnership return means a penalty for each individual partner.
• Pay Self Assessment tax by 31 January, with a second payment by 31 July if you pay on account.
• VAT returns (usually quarterly) if VAT-registered; PAYE each payday if you employ staff.