both are easy to form and offer few legal obligations. the profits, losses and taxes of both organizations are directly linked to the business’s owners. the only obligations are local registrations and licenses. in addition, a partnership must register as a new business with the local government. that said most partnerships have a partnership agreement, which is developed by the partners and outlines the businesses practices and responsibilities. both sole proprietorships and partnerships are directly linked to the personal finances of their owners. all operations, capital tax obligations and liabilities are the responsibility of the owners. in addition, a partner may become liable for the actions and debt of other partners.

if you decide to operate as a sole trader, the initial things to do include choosing a business name (or simply trade under your own name), registering for self-assessment (and vat if your earnings are likely to be substantial) and taking out any relevant business insurance. if you decide to set up as a sole trader, remember that you will be personally liable for paying bills and ultimately responsible if the business makes a loss. you’ll also need to pay national insurance and register for vat if you expect your turnover to be over the current threshold. as your business expands you may also need employer’s liability insurance, if you hire employees, and public or environmental liability insurance, if you decide to perform services or provide goods in a public space.