What is the Difference Between Partnership and Limited Company?

The main differences between a partnership and a limited company are related to ownership, management, liability, and taxation. Here are the key distinctions:

Ownership and Management: In a limited company, the shareholders own the business, but the directors are responsible for operating it. In a partnership, the partners both own and run the business.
Liability: Limited companies have limited liability for their shareholders, which means that their personal assets are protected from the company's debts. In some partnerships, such as general partnerships, partners have unlimited liability and are personally responsible for the losses and profits of the business. In limited partnerships, some partners may have limited liability.
Formation: Partnerships are relatively simple to set up and require multiple owners to jointly own and run the business. Limited companies, on the other hand, must be registered with the state and have a more formal structure.
Taxation: Partnerships are not subject to direct taxation, but partners are responsible for paying income tax and National Insurance on their share of the partnership's profits. Limited companies are subject to corporate taxation.
Types of Partnerships: There are three main types of partnerships: general partnerships, limited partnerships, and limited liability partnerships. Each type has different levels of liability and responsibilities for the partners.
Types of Limited Companies: There are two types of limited companies: private limited and public limited. These companies have a separate legal identity from their owners and are subject to more formal governance and reporting requirements.

When deciding between a partnership and a limited company, it is essential to consider factors such as liability, taxation, and management structure to determine the best fit for your business needs.