A partnership is a business run by two or more people together. A written agreement is necessary stating the terms and conditions of conducting the business without harming the interest of either party. Profits are shared either equally or as per the terms given in the written legal agreement. If profits are to be shared, so are the liabilities too. With the Limited Liability Partnerships Act, partners can profit from limited liability and reap tax advantages.
Unlike a sole trader or a partnership concern, the Limited Company is legally a separate entity. The directors and the shareholders have limited liability in the business. When such a company is created, it has an Authorized shareholding which defines the limit of the shareholder liability. This is the most viable options if the capital is being invested into the business by anyone who does not wish to be involved in running it.
Under the Companies Act of 1985, only limited companies need to be registered in the UK with Companies House. If you are a sole-trader or a partnership concern, you do not need to register but you should notify the Inland Revenue (IR) and National Insurance Contributions (NIC) Agency about the change in employment status, if you are switching from a regular job to a business.