If you are required to trade as a partnership, but are concerned about potential liabilities, then it may well be worth setting up a limited liability partnership (LLP).
Like a limited company, these are separate legal entities, distinct from their members. They have to be registered at Companies House and file accounts and an annual return every year but, in return, members enjoy the protection of limited liability. This means that your risk of loss is normally limited to the money you invest in the business (as loan capital). They are not as flexible as limited companies - it is difficult, for example, to bring in an outside investor who is not to be involved in daily management. As a member, you are taxed as if you are a partner in an ordinary partnership.
There are only a few thousand LLPs, compared to 1.4m limited companies. If you are not required to trade as a partnership, forming a limited company instead may well be a more satisfactory solution.
