Establishing a Partnership in England and Wales

A general partnership is a business arrangement in which two or more persons carry on a business together with a view to profit. Partners may be individuals or legal persons, including companies, making partnerships suitable for domestic businesses, professional practices, joint ventures and certain cross-border commercial arrangements. 

A general partnership is relatively flexible and can generally be established without incorporation at Companies House. However, its flexibility is accompanied by significant personal responsibility. The partners ordinarily share responsibility for the partnership’s obligations and may be personally liable for its debts and losses. Each partner may also have authority to bind the partnership through acts undertaken in the ordinary course of its business. 

Our London office assists individuals, companies, investors and other commercial participants with establishing and operating partnerships in England and Wales. 

The legal framework 

General partnerships in England and Wales are principally governed by the Partnership Act 1890, together with the terms agreed between the partners and applicable principles of contract, agency and common law. 

Unlike a limited company or limited liability partnership, a general partnership in England and Wales does not ordinarily have separate legal personality from its partners. The business is therefore carried on collectively by the partners, who own the partnership property and assume responsibility for its obligations. 

No written agreement is strictly required to create a partnership. A partnership may arise from how the parties conduct their business, potentially even where they did not expressly intend to establish one. In the absence of a tailored partnership agreement, statutory default rules may govern matters such as profit sharing, management, decision-making and dissolution. These rules may not reflect the parties’ commercial intentions. 

A general partnership should be distinguished from a limited partnership, in which certain partners may have limited liability, and an LLP, which is an incorporated body with separate legal personality. Different registration, governance and liability rules apply to each structure. 

The establishment process 

Establishing a partnership will generally involve: 

• Assessing whether a general partnership is appropriate, taking account of liability, governance, taxation and commercial objectives; 

• Identifying the partners, their proposed roles and their respective contributions; 

• Selecting a business name that complies with applicable naming and disclosure requirements; 

• Defining the partnership’s activities and intended duration; 

• Agreeing the ownership and use of partnership property; 

• Determining how profits, losses and drawings will be allocated; 

• Preparing and executing a partnership agreement; 

• Appointing a nominated partner, where required, for partnership tax reporting and communications with HM Revenue & Customs; 

• Registering the partnership and its partners with HM Revenue & Customs; and 

• Completing any additional tax, employment, licensing or sector-specific registrations. 

The partnership agreement 

A carefully drafted partnership agreement provides clarity and reduces the risk of future disputes. It may address: 

• capital contributions and ownership of assets; 

• allocation of profits and losses; 

• management responsibilities and voting rights; 

• authority to enter into contracts; 

• banking and financial controls; 

• admission, retirement and expulsion of partners; 

• illness, incapacity or death of a partner; 

• confidentiality and restrictive covenants; 

• dispute resolution and deadlock; 

• valuation and transfer of partnership interests; and 

• termination, dissolution and distribution of assets; 

• obligations to contribute capital or funding in the future. 

The agreement should also address how the business will continue following changes in membership and whether outgoing partners remain subject to continuing obligations. 

How we can assist 

We can advise on whether a general partnership is the most suitable structure and compare it with a limited company, limited partnership or LLP. Our assistance may include designing the ownership and governance arrangements, preparing a tailored partnership agreement and advising on the partners’ authority, duties and potential liabilities. 

We can also assist with amendments to existing partnership arrangements, admission or retirement of partners, business succession, dissolution and related commercial contracts. Where specialist tax treatment requires consideration, we can coordinate with the client’s accountants and tax advisers. 

Our multilingual team provides assistance in English, Hungarian, German, Spanish, Russian and Turkish, enabling us to support domestic and international partners establishing businesses in England and Wales. 

Early legal advice can ensure that the partners’ commercial understanding is clearly documented and that appropriate arrangements are in place for managing liability, decision-making and future changes.