A partnership may be defined as a relation which subsists between persons carrying on a business in common with a view of profit.
Business and profit can encompass a wide of range of activities including commercial trading and the holding of investments with a view to receiving income and realising gains.
The liability of partners was initially unlimited, although over the years limited partnerships, whereby some partners could benefit from the protection of limited liability and more recently, limited liability partnerships, whereby all partners liability is limited, have been introduced in many jurisdictions.
Even if a general partnership is used, the effective liability of individuals may be limited by virtue of using a limited company as a partner.
Although use of limited companies is now more common, a partnership can afford a number of advantages including:
- Transparency for tax purposes, meaning that the partnership itself is not taxable but the partners are.
- Inheritance tax planning advantages (e.g. for UK residents).
- Confidentiality; partnerships exist in common law and it is not always necessary to register a partnership.
- Flexibility in terms of changes of the partnership agreement, the proper law of the partnership, etc.
- The use of a partnership in conjunction with other vehicles, including companies, for effective planning
We have experience in the establishment and administration of partnerships including provision of appropriate vehicles to act as partners, statutory compliance, administration and accounting services in a number of jurisdictions.