Flexible business banking for partnerships
In principle a partnership is any business where two or more people share the responsibility of running the business – for example in a law firm where several people are named as ‘partners’.
But any company can be run as a partnership, and there are some benefits to registering as a limited partnership or as a limited liability partnership (LLP), which are two slightly different structures for a company.
Here are some of the main types of partnership structures for a business, as well as some of the things to keep in mind when setting up your company finances.
Types of business partnerships
We’ve already mentioned some of the main types of business partnerships above, and it’s important to understand how these can affect your liability for the business’s debts on a personal level.
A limited partnership does not remove your personal liability for company debts – but it allows you to put limits on one partner’s liability, making the other partner or partners more responsible in their own right.
This can be a good idea, for example if one partner is going to take a back seat in the running of the business, or if you agree to let someone like an investor be a partner in exchange for them having little to no liability for the company’s debt.
What is a limited liability partnership?
A limited liability partnership, or LLP, is the main other kind of partnership. Unlike a limited partnership, it does protect your personal finances against any debts run up by the business, making it a popular structure for companies with several partners, where you need to remove some of the risk.
You can easily identify a limited liability partnership because it must have ‘LLP’ at the end of its name, so you should be able to find out if companies you already trade with, or others in your chosen industry, are already operating as LLPs.
Unusually, it is also possible to have a limited company and an LLP with the same name, apart from the ‘LLP’ part at the end, either if the limited company is registered to you already, or if you get written permission to use the name.
Because of this, you may sometimes see companies and LLPs run by the same people with the same or very similar names – so if you sometimes see the name without the ‘LLP’ part, this is not always wrong.
Business banking for partnerships
Business banking can be complicated for partnerships regardless of which structure you choose, as you may need to give access to the account to several individuals.
You might also want to have a separate account for a partnership, when you already have a business account set up for a limited company of the same name.
It’s important to get your finances structured well – for example, if you set up an LLP, you should make sure it has its own account so that none of your finances are exposed to risk within the LLP unnecessarily, when the structure gives you a way to legally protect those funds against the business’s debts.
An easy alternative from Arro
The Arro Business Account is an alternative to traditional business bank accounts that can be set up in as little as three minutes, with guaranteed acceptance as long as you pass our simple Fair Fit test.
It gives you access to the kinds of services you would expect to get from a traditional business bank account, such as the ability to pay suppliers online, via Faster Payments and Direct Debit. You get a sort code and account number unique to your business account, so you can take payments into the account fee-free too.
You also receive a Business MasterCard® debit card issued in your name, so you have a professional way to make card payments and purchases direct from your LLP account, again to make sure you are always dealing directly with the partnership’s money, and not your own.
Instant access for you and your partners
Within minutes of applying, you will receive your account number, allowing you and your partners to start transferring money into the account, accessing the online dashboard and setting up Direct Debits and Faster Payments.
You also immediately receive your virtual MasterCard® details via SMS, which again means you can start using the card online before the physical card arrives, so your partnership is not reliant on one person with the physical MasterCard® to be able to make purchases.