A partnership is for you if you are offering services with people you know well. Many building and domestic services firms are either sole traders or partnerships, but bear in mind that if you hope to gain sub-contract work from larger companies you may need to incorporate to satisfy their guidelines.

Partnerships are a very common extension of the sole trader model, for example when two individuals or a husband and wife work together to build the business. The partnership is just as flexible, has the benefit of two or more heads, and the business won’t collapse if one of you is sick or needs a holiday.

There has to be an agreement as to how the liabilities, ownership and profits of the business are split and what happens if one partner wants to leave, which should be enshrined in a partnership agreement. However, the only legal requirement, as with a one-person business, is that each partner is registered as self-employed and puts in a separate tax return.

In a standard partnership, as with sole traders, all partners are also responsible for all the debts owed by the business. This doesn’t only apply to debts you have incurred as a partner but to those of any partner, so you need to pay particular care to the conduct of the people you go into business with.

A partnership like this is ‘unlimited’, and as such is a very different animal from a limited liability partnership (LLP), which we look at below. But in both cases your share of the profit will be taxed as income: in addition you will have to pay 9% Class 4 National Insurance contributions (NIC) as well as £2.50 a week Class 2 NIC – though the former carries no benefit.