Private Companies – Partnerships
A partnership exists when two or more people jointly operate and own a business, as opposed to when one person operates and owns a firm. The enterprise may engage in any trade, such as organic dairy farming or plumbing, or any profession, such as dentistry or architecture. According to BEIS data, there are now approximately 415 000 partnerships in the United Kingdom. Slaughter & May, the City law firm, is one of the largest, with approximately 110 partners and 1,140 workers. However, the majority are far smaller, with around 70% consisting only of the partners and no staff. The Partnership Act of 1890 primarily governs partnerships (PA 1890). In accordance with section 1 of this Act, a partnership is lawfully created when two or more people operate a business for profit. The collaboration will be governed by a contract, which may be oral or written.

​In order to join a partnership, no procedures, such as registration with a government agency, are required. This means that if you and a friend start baking macaroons with the goal of selling them to your fellow students to gain money for yourselves (rather than, for example, for charity) and sharing the proceeds, you have formed a partnership under the PA 1890, even if you did not intend to do so. However, each spouse must register for tax purposes with HMRC. The partners will divide the business's profits and losses equally. In a partnership consisting exclusively of persons, each partner is taxed as a self-employed individual, paying income tax on his or her portion of the partnership's profits.

A partnership has no legal existence of its own. Therefore, the partners have limitless accountability for the partnership's debts. As with a sole proprietorship, if a partnership fails, creditors can pursue not just the assets used by the business, but also the personal assets of the partners. This obligation is also stated to be joint and several among the partners, allowing a creditor to pursue the full amount of a debt from any one partner or from all partners jointly. When a partner dies or retires, the surviving partners will typically buy him out so that the partnership can continue. Unless this is agreed upon, the partnership will be dissolved. 


In summary, a partnership consists of two or more persons who, pursuant to a contract (whether written or not) between them:
(a) share the right to participate in making decisions that affect the business or the business's assets (although they may have agreed that one or more of their number will not be involved in day-to-day matters, but only in fundamental decisions); and (b) share the responsibility for managing the business and its assets.
(b) share ownership of the business's assets (although they may have agreed that the business may use an asset owned by one of the partners individually).
(c) share unlimited liability for the business's debts; (d) share unlimited liability for the business's earnings; nevertheless, if one partner fails to pay, the others must pay his share.

Private Companies - Sole Trader
A sole trader is, as the name implies, a self-employed individual who owns and operates his own firm. A single trader can work in any industry or profession, such as that of an electrician, dog walker, hairdresser, or attorney. A sole proprietorship can be established without taking any formal formalities, however for taxation purposes, the sole proprietorship must register with HM Revenue and Customs (HMRC). In the UK, sole proprietorships make up the majority of enterprises. There are around 3.5 million sole merchants, according to BEIS statistics. It is important to note that a professional who manages their firm alone, such a lawyer, is more commonly referred to as a "single practitioner". Sometimes sole proprietors are used to refer to solitary traders of any kind. The term "single trader" is the only one used in the remaining chapters of this book. Over 90% of sole proprietors operate completely alone,

however some may employ others. If the sole trader owns the business alone, it will still be a sole trader if there are employees. A lone proprietor keeps all of the profit for himself and derives his income from the money he receives from his customers or clients. He pays income tax because he is self-employed. . A sole proprietor is legally responsible for the whole amount of the company's debts. The company has no independent legal status. As a result, the sole proprietor's personal and commercial assets are treated equally. If a firm (like a florist) fails, not only will the lone proprietor's company assets, like the store, flowers, and delivery van, be confiscated or sold to pay off debts, but also the solitary proprietor's personal assets, such any savings, the house, and the automobile. The lone proprietor may ultimately be declared bankrupt if he is unable to pay off all of his debts using both his business and personal assets. The term "infinite liability" refers to this. The sole proprietor's business ends when he or she retires or passes away, albeit the assets of the business or the sole proprietor may be sold if a buyer can be found.

Consequently, a sole trader is a person who, by themselves, possesses the following characteristics:
(a) the authority to decide all matters pertaining to the business;
(b) ownership of all business assets;
(c) responsibility for paying income tax on all business profits; and
(d) unlimited liability for the debts of the business.


​A sole proprietorship is not subject to a single piece of legislation. Different laws that can equally apply to people or enterprises in general contain the rules that control the operations of a lone proprietor. For instance, if a sole proprietor's firm revenue surpasses a specific threshold, the sole proprietor must register for value added tax (VAT); this rule also applies to other types of businesses. Like all other types of business, sole proprietorships must abide by the common law.

​Private Companies –Incorporated and Unincorporated Business 
Both incorporated and unincorporated forms of business can exist. Unincorporated enterprises can legally form with very little, if any, administrative effort. In contrast, corporations have to go through a formal registration procedure to be able to operate lawfully. Additionally, corporations are legal entities with independent existences from that of their owners. Unincorporated businesses typically receive the same treatment as their owners and have the same legal standing. The sole proprietorship and partnership are the two most prevalent types of unincorporated businesses in the UK. The limited liability partnership, the private limited company, and the public limited company are the three types of incorporated businesses that are most prevalent in the UK. We'll examine each of these in turn now, along with a few uncommon business models you might see in the real world.

Private Companies - Introduction 
Our way of life is dominated by businesses. They provide for our needs in terms of food, clothing, shelter, transportation, entertainment, education, healthcare, and employment. They are the foundation of our capitalist society and the engine that propels the UK economy to its current position as the fifth largest in the world.

​The fact that so few lawyers can actually avoid them is hardly unexpected. Future corporate lawyers who read this book and specialise in providing advice on company operations will undoubtedly be keen to learn more since they are aware that in order to support themselves, they must have a thorough understanding of the law governing enterprises. Future non-corporate attorneys may be noticeably less enthusiastic and may even criticise the idea of having to spend time on something that may initially appear trivial. However, it is important to note that knowing the significance of the business type that owned the van would be essential in deciding against whom to make the claim and what financial resources might be available to pay damages. For instance, imagine that you were working on a personal injury case for a client whose 3-year-old daughter had been struck by a van. Or if you were representing one party in a divorce and some of the marital assets were invested in a business, you would need to have a thorough understanding of the legal requirements that the business must meet in order for your client to receive his portion of the business.

You might be representing a client who was fired for making lewd approaches toward coworkers at the corporate holiday party. Once more, the nature of the company may influence how you approach the issue. Therefore, practically all lawyers should have at least a basic understanding of commercial law. The UK government department in charge of overseeing businesses, the Department for Business, Energy and Industrial Strategy (BEIS), estimates that at the beginning of 2020 (the most recent period for which data is available), there were roughly 6 million active businesses in the country, which employed 27.7 million people and generated an estimated total revenue of £4,350 billion. There are numerous variations of these businesses. We'll first look at each of these types, and then we'll investigate why an entrepreneur might decide to use one over the other when running her company.