An old friend of mine from school and I have started doing web design and development work under a single name. Work is ad-hoc - we're both full time students - and is mostly 'friend of a friend' stuff.

Generally client work is found and done by just one of us, however we split larger projects between us (I'm better at backend/programming work, he's better at frontend/design work). Our portfolio is combined (this is a big plus!).

For work that we do independent of each other the person doing the work takes the payment for the job, when we work together we work out our own split - usually 50/50.

We offer hosting and maintenance, which most clients take, for a monthly fee. This fee is kept as 'company money' for paying the bills and for other purchases. I'm currently using a personal 'e-savings' account for this which had no other use. I pay all the bills myself so this works. We're looking at opening a business bank account soon.

Side note: I trust the guy I'm working with, I highly doubt they'll be any issues working with him with regard to money.

My question is:

* Is this a good way to do things? How would we improve the way we work?
* We're not earning enough to be paying tax. But are there any problems with the way we're operating? (UK) We're not in any way 'registered' or official.
* If we did this full-time how should we change the way we work? I'd envisage pooling contact income and paying ourselves a salary, work varies though so this amount would also vary.