In a partnership, all partner(s) share the risk and reward. All profits and losses are shared in the profit sharing ratio as agreed in the partnership agreement that should be put in place. It is important to recognise that unless you form a limited liability partnership, you are all personally liable for the business’s debts. Accounts must be prepared on an annual basis and all partners are required to submit an annual personal tax return and the partnership is also required to submit a partnership tax return.

A sole trader business is a business that is owned by one person and is unincorporated. Like a partnership, accounts must be prepared on an annual basis.  

All partnerships and sole traders must be registered with HMRC and submit Annual Self Assessments (tax returns). There are many advantages and disadvantages of running your business as an unincorporated business versus a limited company and these can be explained during an initial meeting with H & M Accountancy Solutions.