To set up a general partnership you must choose a name, choose your nominated partner, and register with HMRC.
You, along with the other partners in the partnership, will be acting as agents for each other and you will be individually responsible for your and their actions as well as being responsible collectively as a partnership. As a partner, you must act honestly and in the best interests of the partnership and you must tell the other partners about any benefit you have derived from the partnership without the consent of the other partners.
You can share all profits between the partners and each partner will pay tax on their share of the profits.
Equally, you’re personally responsible for your share of any losses the partnership makes and bills for things you buy for your business (eg stock or equipment). Even if you don’t intend to operate as a partnership, if you act in a way that suggests to the public that you are, then all partners will be liable for the obligations of the partnership. So, although there is no formal requirement for a written Partnership agreement, it is a good idea to enter into such a document to prevent disputes between partners.
Special rules apply in Scotland, in relation to Scottish general partnership. While the process of registering a Scottish general partnership is the same as for general partnerships in England and Wales, the Scottish general partnership has a separate legal personality from the partners. However, every partner has unlimited liability to creditors for all the partnership’s debts. Further, a Scottish general partnership may need to be registered with Companies House in certain circumstances (eg where all partners are limited liability companies regardless of wherever they are incorporated).