A partnership exists where two or more persons come together with a view to profit. Partnerships do not pay tax; the individual partners pay tax usually as self-employed individuals. Partnership can employ staff in the same way as limited companies. Limited Liability Partnerships, LLP, differ mainly in the reporting requirements. Accounts and tax returns are required both for the partnership itself and the individual partners.
An LLP will be registered as a separate entity for VAT purposes, and reliefs for certain partnership assets are available for inheritance tax, business, and agricultural property.
A partnership can have a Limited Partner under the Limited Partnership Act 1907 without being an LLP. An LLP can, broadly, restrict a partner's liability to the capital contributed by that partner, in the event of financial difficulty. This is a complex area for which professional guidance should be sought.