In this type of structure, two or more individuals or entities agree to share the risks, costs and responsibilities of being in business. Each partner is self-employed and takes a set portion of any profits the business makes. Partners typically contribute finance, time and skills, share in the decision-making and are personally responsible for any debts.
Unlike in a limited company set-up, a partnership has no legal existence distinct from the partners themselves. If a partner leaves, dies or goes bankrupt, the partnership must be dissolved. The business, nonetheless, can still continue to exist.
A partnership thus offers a relatively simple and flexible option for two or more people to own and run a business together. However, partners do not enjoy any protection if the business fails.