If your business will be owned and operated by several individuals, you’ll want to take a look at structuring your business as a partnership.
A partnership is a business collaboration where 2 or more ‘legal persons’ share ownership, risk, responsibility and profit (or loss). There are different types of partnerships (Conventional, Limited and Limited Liability), as defined by different partnership acts.
When you set up a partnership you will need to choose a name, a nominated partner, and register with the HMRC. The nominated partner is responsible for managing the partnership’s tax returns and keeping business records.
It is important that you decide what the partners contributions are, what the goals of the business are and how profits will be split. This will be recorded in a partnership agreement (Though not a legal requirement, we highly recommend a written agreement). This is the business version of a prenup, and it is essential to have it all laid out before you start your business. If there is no partnership agreement in place, and a dispute arises then the provision of the Partnership Act 1980 will apply.
Our cloud-based software will make bookkeeping easy – you can raise invoices and keep track of expenses online. The live P&L will enable you to know the business profits at any time. Should the partners vote for a distribution of profits, the profits will be split between the partners, in line with the partnership agreement. Any distributions can be recorded through the online software, so that you can track your personal taxes due (And to help us complete your self-assessment return).
Partnerships must file a partnership tax return with the HMRC on an annual basis – with all the information captured on our system, we will complete this on your behalf, and send out for your approval, before submission. The return needs to show income, expenditure and the resulting profit. But the partnership does not pay any tax.
Partnerships are transparent for tax purposes – each partner is taxed as an individual instead of the partnership being taxed as a separate legal entity. The partners pay tax when their personal self-assessments are submitted, either as sole traders or employees. As with sole traders, a partner will be required to make payments on account with their income tax payments.
Our fees start from £50 + VAT per month.