Partnership Agreement UK Guide 2025: Legal Requirements, Tax, VAT & GDPR-Compliant Templates

What are the legal requirements for a partnership in the UK?

Quick Answer: UK partnerships require no formal registration or written agreement under the Partnership Act 1890, though a written partnership agreement is strongly recommended to protect all partners’ interests and override default statutory rules.

A business partnership in the UK is governed by the Partnership Act 1890, which defines a partnership as the relationship between two or more persons carrying on a business in common with a view to profit. This makes partnerships one of the simplest business structures to establish in the UK.

Core Legal Requirements:

General partnerships must have at least two partners, with no maximum limit since 2002, and partners are not required to be UK residents. Each partner has unlimited liability for the firm’s debts and obligations, as a general partnership has no separate legal personality from its individual partners.

While there is no legal requirement for a partnership agreement to take a specific form or contain compulsory provisions, most agreements will cover essential elements like the partnership name, business description, profit-sharing arrangements, decision-making procedures, and dispute resolution mechanisms.

Key Registration Requirements:

If you started a partnership or became a partner during the 2024 to 2025 tax year, you must register with HMRC before 5 October 2025. You must also register for VAT if your taxable turnover exceeds £90,000, though you can voluntarily register below this threshold to reclaim VAT on business supplies.

A general partnership is established as soon as two or more people start a business together with a view to making a profit, with no requirement for formal registration or even a named partnership. However, you’ll need to include the names of your partners on business stationery and at your registered office, and choose a nominated partner to handle HMRC registrations.

Default Rules vs Written Agreements:

In the absence of a written agreement on basic matters such as profit sharing, the Partnership Act 1890 sets out default rules that automatically apply. These default rules may not reflect your actual intentions and can expose you to significant risk. A written partnership agreement allows you to override these default provisions and establish custom terms that suit your specific business needs.

Internal links: Complete guide to setting up a business in the UK

Do I need a solicitor for a partnership agreement?

Quick Answer: While not legally required, consulting a solicitor for your partnership agreement is strongly advisable as they can help draft a clear, legally sound agreement that protects all partners’ interests and addresses potential disputes before they arise.

There is no legal requirement for a general partnership to have a written partnership agreement, but in most cases it will be in all partners’ interests to enter into one. The question isn’t whether you legally need a solicitor, but whether the cost of professional legal advice outweighs the potential financial and operational risks of an inadequate agreement.

When Solicitor Input Is Essential:

You should absolutely engage a solicitor when your partnership involves significant capital contributions, valuable intellectual property, or complex profit-sharing arrangements. Professional legal input is particularly important for drafting clauses around decision-making thresholds, capital expenditure limits, admission of new partners, and dispute resolution mechanisms.

Cost-Effective Middle Ground:

For straightforward partnerships, you can start with a professionally-drafted template that covers standard clauses, then have a solicitor review and customize it for your specific circumstances. This approach provides legal protection without the expense of having a solicitor draft everything from scratch.

Common mistakes include using generic templates without adaptation to UK law and your business specifics, rushing in with just a handshake agreement, and failing to address intellectual property ownership.

Essential Clauses Requiring Legal Expertise:

Your partnership agreement should set out what capital or assets each partner will provide, how partners share profits, how decision-making works, and how to handle exits or disputes. You should include clear requirements for time commitment, whether partners can take regular payments or must wait for profit distributions, and clarify each partner’s responsibility for debts.

Under the default rules of the Partnership Act 1890, partners are jointly and severally liable for partnership debts, so it’s crucial to clearly document liability arrangements, dissolution procedures, buyout provisions, and succession plans.

Internal links: Setting up a business structure in the UK

How do you write a simple partnership agreement?

Quick Answer: To write a partnership agreement, document joint goals and value propositions, define each partner’s roles and responsibilities with clear deliverables, establish profit-sharing arrangements, and include decision-making procedures and dispute resolution mechanisms.

A partnership agreement can be made verbally or in writing, but to avoid any dispute over the terms, it is advisable to enter into a written partnership agreement. Here’s a structured approach to creating your partnership agreement:

Step 1: Partnership Fundamentals

Most partnership agreements will cover the partnership name, description of the business to be carried on, and identification of all partners with their contact details and contributions. Start by clearly defining the partnership’s purpose, business activities, and intended duration.

Step 2: Financial Arrangements

Document each partner’s capital contribution (money, property, or expertise), profit and loss sharing ratios, and arrangements for drawings or salaries. Specify whether partners can take regular payments or must wait for profits to be distributed. Include provisions for additional capital contributions if needed for business expansion.

Step 3: Roles and Decision-Making

Clearly define decision-making authority, such as requiring unanimous consent for all decisions regarding capital expenditure over £2,500, while allowing any partner to make day-to-day operational decisions. Specify which decisions require majority vote versus unanimous agreement.

Step 4: Rights and Obligations

Define each partner’s time commitment, management responsibilities, and authority to bind the partnership. Each partner is entitled to participate in management, receive an equal share of profit (unless otherwise agreed), get an indemnity for liabilities assumed in the course of business, and has the right not to be expelled by other partners.

Step 5: Exit and Dissolution Provisions

Explain when and how the partnership can be dissolved, what happens when a partner leaves or is expelled, and cover buyout arrangements and succession plans. Under default rules, a partnership ends on the death of a partner unless your agreement specifies otherwise.

Step 6: Dispute Resolution

Include dispute resolution procedures such as requiring partners to attend mediation with an accredited third-party mediator before pursuing legal action if they fail to resolve disputes internally after reasonable effort.

Step 7: Restrictive Covenants

Include restrictive covenant clauses to prevent a departing partner from setting up competing businesses during or after the partnership, and consider provisions preventing departing partners from soliciting your clients.

Internal links: Business formation guide

How does IR35 affect partnership agreements?

IR35, officially known as the off-payroll working rules, ensures that workers providing services through intermediaries pay broadly the same Income Tax and National Insurance as employees would if they were providing services directly to the client. Understanding how these rules interact with partnership structures is crucial for compliance.

Partnership vs Personal Service Company Distinction:

IR35 rules apply to individuals working through intermediaries such as limited companies (Personal Service Companies or PSCs) and partnerships that provide services from independent workers. The legislation targets those workers considered by HMRC to be ‘disguised employees’ who take dividends from their company and pay less in National Insurance Contributions than they would as employees.

General Partnership Treatment:

Traditional general partnerships where partners genuinely work together in a business are typically outside IR35 considerations because the partners aren’t providing services through an intermediary in the way the legislation targets. However, complications arise when a partnership provides services through one designated partner or when partnership structures are used to circumvent employment status.

IR35 Status Determination:

If the off-payroll working rules apply, the client is responsible for determining the worker’s employment status for tax and must produce a status determination statement including the reasons for their determination. Since April 2021, medium and large businesses must determine IR35 status for their contractors, but small clients leave this responsibility with the contractor.

From 6 April 2025, the thresholds defining a ‘small’ company are increasing, meaning some companies who previously had to determine IR35 status will now pass that responsibility back to contractors. A company is classed as small if it meets at least two criteria: turnover up to £15 million, balance sheet totals to £7.5 million, or 50 or fewer employees.

Key IR35 Status Tests:

IR35 status is determined by examining control (how much control the client has over how, when, and where work is performed), substitution (whether the contractor can send someone else to do the work), and mutuality of obligation (whether there’s an ongoing obligation to provide and accept work).

Mutuality of obligations has become a key IR35 factor in its own right, with HMRC’s position being that where work is provided for remuneration, a contract exists and mutuality of obligations is always present. However, contractors should not rely solely on MOO when determining their IR35 position.

Tax Implications When Inside IR35:

If deemed inside IR35, contractors face deductions for Income Tax and National Insurance Contributions at employee rates, potentially reducing take-home pay by 15-25% compared to outside IR35 arrangements. If a worker is deemed employed for tax purposes, the deemed employer must deduct Income Tax and employee National Insurance contributions from fees paid, and pay employer National Insurance contributions and Apprenticeship Levy if applicable.

Internal links: Understanding business structures and tax implications | Official HMRC IR35 guidance

Are partnership agreements subject to VAT?

Quick Answer: The partnership itself will be required to register for VAT if the business turnover reaches the required threshold (£90,000 for 2025), with the partnership being the taxable person for VAT purposes rather than individual partners.

Under section 45 of the VAT Act 1994, individuals carrying on business in partnership are treated as a single person for VAT purposes only. This creates some important distinctions that partnerships must understand.

Partnership as a Separate Taxable Person:

A partner carrying on business on their own account as a sole proprietor is a different person from the same individual carrying on another business in partnership with others. As partners in a firm are treated as a single person for VAT purposes, one registration will suffice to cover all business activities of those partners acting collectively.

A partnership comprised of specific partners will only be allowed one VAT registration regardless of the diversity of its business activities, but the same individuals may simultaneously have separate VAT registrations for activities they carry on as sole proprietors.

VAT Registration Requirements:

A partnership in the UK must register for VAT if its taxable turnover exceeds £90,000 within any 12-month period, with registration required with HMRC within 30 days of exceeding this threshold. VAT registration is required if turnover exceeds £90,000, though partnerships can choose to register voluntarily below this threshold to reclaim VAT on business supplies.

VAT Registration Process:

A partnership must submit two forms to register for VAT: the VAT 1 form (the main application including the trading name or names of individual partners, signed by one partner) and the VAT 2 form (detailing all partners, with each partner’s signature, or this information can be sent to HMRC in writing).

Online registration via the HMRC Government Gateway is the quickest and most common method, while postal registration using paper forms is an alternative if online submission isn’t feasible.

Partner Changes and VAT:

Once a partnership is registered, it does not need to deregister every time a partner joins or leaves, but HMRC must be informed within 30 days of any changes. Until HMRC is notified of a departure, the departing partner remains liable for VAT debts, and when a new partner joins, they must provide their details via VAT 2 or an equivalent declaration.

Joint and Several VAT Liability:

All partners share joint liability for VAT obligations and debts, meaning HMRC can pursue the full VAT amount from any single partner, and even after leaving the partnership, ex-partners remain liable for any VAT debts incurred during their time in the business.

Partnership vs Sole Trader VAT Treatment:

A profit share from a partnership is not seen as a supply for VAT purposes, so individual members are actually able to earn more money before becoming registered for VAT in their own right, as partnership income is ignored when determining whether individuals exceed the VAT registration limit.

Internal links: VAT registration for new businesses | HMRC VAT registration guidance

What are the GDPR implications of partnership agreements?

Partnerships handling personal data must comply with the UK GDPR (UK General Data Protection Regulation) and Data Protection Act 2018. The UK GDPR sits alongside an amended version of the DPA 2018, with key principles, rights and obligations remaining the same as before Brexit.

Data Controller Responsibilities:

Anyone responsible for using personal data must ensure the information is handled in a way that ensures appropriate security, including protection against unlawful or unauthorised processing, access, loss, destruction or damage. This applies whether the partnership is acting as a data controller, processor, or joint controller.

Partnership as Joint Controllers:

If partners are acting with another controller as joint controllers of personal data, there is a legal obligation to set out responsibilities in a joint control arrangement under both the UK GDPR and the DPA 2018. A data sharing agreement between parties can help put a joint control arrangement in place and helps demonstrate meeting accountability obligations under the UK GDPR.

Data Sharing Agreements:

Data sharing agreements set out the purpose of data sharing, cover what happens to data at each stage, set standards, and help all parties involved to be clear about their roles and responsibilities. Agreements should clearly identify all organisations involved with contact details for their Data Protection Officer or relevant employee responsible for data sharing.

Contractual Requirements When Using Processors:

Whenever a controller uses a processor to process personal data on their behalf, a written contract needs to be in place between the parties, with the UK GDPR setting out what needs to be included. The contract must include details about the processing (subject matter, duration, nature and purpose), and specific terms about processing only on documented instructions, duty of confidence, appropriate security measures, and provisions for data subjects’ rights.

2025 Data Protection Updates:

The Data (Use and Access) Act came into law on 19 June 2025, making targeted reforms by amending the UK GDPR. The Act introduces a new duty for information society services likely to be accessed by children, requiring these services to consider children’s higher protection matters when designing processing activities.

Essential GDPR Compliance for Partnerships:

Partnerships should carry out due diligence checks to guarantee that processors implement appropriate technical and organisational measures to meet UK GDPR requirements, include clauses allowing compliance audits, and ensure only necessary personal data is shared, with information pseudonymised or minimised wherever possible.

Your agreement should set out procedures for compliance with individual rights including the right of access to information, the right to object, and requests for rectification and erasure. All controllers remain responsible for compliance even if processes specify who carries out particular tasks.

Internal links: Data protection for new businesses | ICO GDPR guidance

Is partnership agreement tax deductible for businesses?

A partnership itself does not pay tax; instead, profits are split between partners, who then pay Income Tax and National Insurance contributions on their share. However, the costs associated with establishing and maintaining partnership agreements can have tax implications.

Legal Fees and Setup Costs:

Legal fees for drafting a partnership agreement are generally allowable as a business expense if they relate to the day-to-day running of the partnership. However, capital expenditure on setting up the partnership structure itself may have different treatment. Professional fees for routine advice about trading matters, contract reviews, and dispute resolution are typically deductible.

Partnership Tax Filing Requirements:

Each partner must file a Self Assessment tax return, and the partnership must file a partnership tax return with HMRC. The nominated partner should complete the partnership return as soon as possible so other partners can use this information to complete their individual Self Assessment tax returns.

Allowable Partnership Expenses:

Partnerships can typically deduct expenses that are wholly and exclusively for business purposes, including professional fees for accounting and legal advice, insurance premiums, office costs, and business-related travel. If the partnership employs staff, it must register for PAYE.

Capital Allowances:

Partnerships can claim capital allowances on qualifying assets such as equipment, machinery, and business vehicles. These allowances reduce the partnership’s taxable profit, with the benefit distributed among partners according to their profit-sharing arrangements.

Internal links: Tax considerations for UK businesses | HMRC partnership guidance

Is partnership agreement legal for UK employees?

It is not possible for an individual to be both a partner in and an employee of the same firm. This fundamental principle distinguishes partnership relationships from employment contracts under UK law.

Partners vs Employees:

Partners in a general partnership are self-employed individuals who share in the profits and losses of the business. They don’t receive employment rights such as holiday pay, sick pay, or protection against unfair dismissal. Partners are jointly and severally liable for debts, while employees have no liability for business debts.

Salaried Partners:

Some firms designate individuals as “salaried partners” who may have employment status for some purposes despite their title. The actual relationship determines employment status, not the job title. HMRC and employment tribunals examine the reality of the working relationship, including factors like profit sharing, liability for losses, and decision-making authority.

Workers’ Rights in Partnerships:

True partners don’t have statutory employment rights, but partnerships can employ staff who do have full employment protections. If the partnership employs staff, it must register for PAYE and comply with employment law obligations.

Internal links: Employment vs self-employment status

What insurance is needed for partnership agreement?

Partnerships face unique insurance needs due to the unlimited liability nature of general partnerships. Each partner has unlimited liability for the firm’s debts and other obligations, making comprehensive insurance coverage essential.

Essential Insurance Coverage:

1. Professional Indemnity Insurance: Protects against claims of professional negligence, errors, or omissions. Many professional bodies and clients require this coverage, with typical limits from £1 million to £10 million depending on your sector.

2. Public Liability Insurance: Covers claims from third parties for injury or property damage caused by your business activities. Standard coverage starts at £1 million, with £5 million common for many partnerships.

3. Employers’ Liability Insurance: Legally required if your partnership employs staff, with minimum coverage of £5 million. This protects against claims from employees injured or becoming ill due to their work.

4. Buildings and Contents Insurance: Covers partnership premises and assets against damage, theft, or loss. Essential if your partnership owns or leases property or holds significant equipment or stock.

5. Key Person Insurance: Provides financial protection if a critical partner dies or becomes seriously ill. The payout can help the partnership continue operations or buy out the partner’s share.

6. Partnership Protection Insurance: Specifically designed to fund the purchase of a deceased or critically ill partner’s share of the business, preventing financial strain on remaining partners.

Who’s Liable for Partnership Accidents:

Partners are jointly and severally liable for partnership obligations, meaning each partner can be held personally responsible for the full amount of any claim against the partnership. Adequate insurance coverage protects both the partnership and individual partners’ personal assets.

Internal links: Business insurance requirements UK

Do partnership agreement workers get holiday pay?

Partners in a general partnership are self-employed and do not receive holiday pay, sick pay, or other employment benefits. For different legal reasons, it is not possible for an individual to be both a partner in and an employee of the same firm.

Partner Entitlements:

Instead of holiday pay, partners typically take time off as agreed in the partnership agreement, with their profit share continuing. The rights and obligations of partners are usually set out in a written partnership agreement but can be agreed orally. Your agreement should specify arrangements for partners taking leave, including how this affects their obligations and profit share.

Salaried Partners:

If someone is designated a “salaried partner” but functions more like an employee, they may have entitlement to statutory holiday pay. The key test is whether they genuinely share in profits and losses and have decision-making authority, or whether they’re effectively employed despite their title.

Partnership Employees:

If your partnership employs staff (who are not partners), those employees are entitled to the statutory minimum of 5.6 weeks’ paid holiday per year. If the partnership employs staff, it must register for PAYE and comply with all employment law obligations including holiday pay.

Internal links: Employment rights and benefits

Can partnership agreement be used by contractors?

Contractors can form partnerships to deliver services jointly, but this creates a fundamentally different relationship from operating as a sole contractor through a Personal Service Company. IR35 rules apply to individuals working through intermediaries such as limited companies and partnerships that provide services from independent workers.

Contractor Partnerships vs PSCs:

When two or more contractors form a genuine partnership where they work together, share profits and losses, and have joint decision-making authority, this partnership structure typically falls outside IR35 considerations. However, if a partnership is used primarily as a vehicle for one individual to provide services (with other partners being passive), HMRC may scrutinize the arrangement.

Key Considerations for Contractor Partnerships:

Partners are jointly and severally liable for partnership debts, which means each contractor in the partnership can be held personally responsible for the full amount of any claim. This is a significant risk compared to operating through a limited company.

Contractor partnerships must register with HMRC, file partnership tax returns, and each partner must complete Self Assessment. Each partner pays Income Tax and National Insurance contributions on their share of partnership profits.

When to Use Partnership vs Limited Company:

Partnerships work well when contractors genuinely collaborate on projects and share expertise. Limited companies offer better liability protection for contractors working independently. Consider your risk exposure, administrative preferences, and whether you’re genuinely working together or simply trying to avoid IR35.

Internal links: Choosing your business structure

Frequently Asked Questions About Partnership Agreements

What is a partnership agreement?

A partnership agreement is a legal contract entered into between business partners that sets out how the partnership will run, including rules around decision-making, profit sharing, partner roles and responsibilities, and dispute resolution. It allows partners to make the terms of the partnership clear from the outset, which reduces the risk of disputes in future and gives greater control compared to default partnership law.

What are 5 disadvantages of a partnership?

The main disadvantages are: (1) Partners have unlimited liability for partnership debts, risking personal assets; (2) Shared profits must be divided among partners; (3) Disagreements between partners may affect business operations; (4) Limited continuity as the partnership may dissolve if one partner leaves unless otherwise agreed; and (5) Each partner can bind the partnership to contracts, creating potential liability from others’ decisions.

Can partnership agreement be used by disabled employees?

It is not possible for an individual to be both a partner and an employee of the same firm. However, disabled individuals can absolutely become partners in a partnership. The Equality Act 2010 prohibits discrimination on grounds of disability, and partnerships must ensure their agreements and practices don’t create barriers to participation. Reasonable adjustments should be documented in the partnership agreement where needed.

What happens if partnership agreement provider goes bankrupt?

If a partner becomes bankrupt, their share typically passes to the trustee in bankruptcy, who may seek to realize the value of that share. Your partnership agreement should explain when and how the partnership can be dissolved, what happens when a partner leaves, and cover buyout arrangements. Most well-drafted agreements include provisions for automatic expulsion of a bankrupt partner and procedures for valuing and purchasing their share to protect the continuing partnership.

Who’s liable if partnership agreement causes injury?

Partners are jointly and severally liable for partnership obligations, meaning any partner can be held personally responsible for the full amount of damages if the partnership causes injury to someone. This is why public liability insurance is essential for all partnerships. The injured party can pursue all partners collectively or any individual partner for the full amount, though partners can seek contribution from each other internally.

Can pregnant employees use partnership agreement?

The question conflates two distinct relationships. An individual cannot be both a partner in and an employee of the same firm. However, a pregnant individual can certainly be a partner, and partnerships should accommodate pregnancy-related needs. If the partnership employs staff (separate from partners), those pregnant employees receive full statutory maternity rights. Partners who are pregnant don’t have statutory maternity leave or pay but can arrange their own leave and payment terms through the partnership agreement.

Can partnership agreement be used during probation period?

Probation periods are an employment concept that doesn’t apply to partnerships. Partners are not employees and don’t serve probation periods. However, partnership agreements can include provisional or probationary partnership arrangements where a new partner has limited profit share, voting rights, or other restrictions for an initial period. These terms should be explicitly documented in a deed of variation or admission agreement.

What if partnership agreement equipment is stolen?

Partnership equipment should be covered by contents or asset insurance. Partners are jointly and severally liable for partnership obligations, meaning all partners share responsibility for replacing stolen equipment unless insurance covers the loss. Your partnership agreement should specify how capital contributions will be made for emergency purchases and whether all partners contribute equally or according to their profit-sharing ratios. Police reports and insurance claims should be filed immediately.

What happens to partnership agreement after Brexit?

Following Brexit, the GDPR is retained in domestic law as the UK GDPR, with key principles, rights and obligations remaining the same, though there are implications for data transfers between the UK and EEA. For partnerships, the fundamental law governing partnerships (the Partnership Act 1890) remains unchanged. The Partnership Act 1890 continues to govern general partnerships, and UK partnerships continue to operate as before, though partnerships trading with EU clients should review any cross-border regulatory issues.

What are the fire safety rules for partnership agreement?

Partnerships operating from business premises must comply with the Regulatory Reform (Fire Safety) Order 2005, which requires a responsible person (typically a designated partner) to carry out a fire risk assessment. Partners are jointly and severally liable for partnership obligations, meaning all partners share liability for fire safety compliance. The partnership must ensure adequate fire detection systems, emergency exits, staff training, and regular fire drills. Failure to comply can result in prohibition notices, fines, or prosecution.

Can partnership agreement be sublet or shared?

If you’re asking about partnership premises, this depends on the lease terms. Most commercial leases prohibit subletting without landlord consent. The partnership agreement should specify how property decisions are made. If you’re asking about partnership interests themselves, the rights and obligations of partners are set out in the partnership agreement, which typically restricts transfer of partnership interests without consent of existing partners. Most agreements include pre-emption rights requiring departing partners to offer their share to existing partners before external parties.

What are the benefits of partnership agreement?

A partnership agreement allows partners to set rules and procedures around how the partnership will run, makes the terms clear from the outset which reduces the risk of future disputes, and gives greater control and flexibility compared to default partnership law rules. Additional benefits include protection of each partner’s investment, clear profit-sharing arrangements, defined decision-making processes, and mechanisms for resolving disputes without litigation.

How does partnership agreement work?

A partnership agreement is a legal contract that defines custom terms for running a business together for profit, setting out capital contributions, profit and loss sharing, decision-making processes, and handling exits or disputes. Using a partnership agreement allows partners to override the default rules under the Partnership Act 1890 and have greater control. The agreement creates legally binding obligations on all partners, enforceable through the courts if necessary.

What contract should consultants have?

Consultants working together can use a partnership agreement if they’re forming a genuine business partnership. However, consultants operating through intermediaries like limited companies or partnerships may be subject to IR35 rules. Individual consultants typically use consultancy agreements or contracts for services with their clients. The choice depends on whether you’re genuinely partnering (sharing profits, losses, and decision-making) or simply collaborating on projects while maintaining separate businesses.

How to implement partnership agreement successfully?

Successful implementation requires: (1) Having all partners sign the agreement with witnesses present; (2) Registering the partnership with HMRC and appointing a nominated partner; (3) Opening a partnership bank account; (4) Registering for VAT if turnover exceeds £90,000; (5) Setting up proper accounting systems; (6) Reviewing the agreement at least annually or whenever there are major changes; and (7) Ensuring all partners understand their obligations and rights under the agreement.

When should you use partnership agreement?

Use a partnership agreement whenever two or more people are carrying on business together with a view to profit. A general partnership is established as soon as two or more people start a business together, even without formal registration or written agreement. However, it is advisable to enter into a written partnership agreement to avoid disputes over terms before starting trading, making significant investments, or bringing in new partners.

Partnership agreement vs traditional alternatives?

Partnerships offer flexibility in profit distribution and shared responsibilities but carry unlimited liability except in LLPs, while limited companies offer liability protection but have more formalities. Unlike limited companies, general partnerships have no separate legal personality from partners. Sole traders have complete control but can’t share workload or expertise. LLPs combine partnership flexibility with limited liability protection but require Companies House registration and more regulatory compliance.