This month we are focusing on: Different Trading Vehicles to Consider for your business
And this week are looking at: What are the requirements for a partnership at year end?
A business partnership is a specific kind of relationship formed by the agreement between two or more individuals to carry on a business as co-owners, each of whom has invested in the business.
A partnership, as different from a limited company, like a sole-trader is not a separate entity from the individual owners.
Currently the minimum requirement is to complete an annual partnership tax return, which is then fed into your personal tax return self-employment supplement for your % of the share of the profits of the partnership
Moving forward this is expected to change with Making Tax Digital and the requirement to submit quarterly figure and end of year figures.
If you decide to go into partnership you should register both the partnership and your own self-assessment with HMRC within 3 months of starting to trade.
At any stage of the business cycle, if you look like you’re going to hit the annual VAT threshold over the coming 12 months, you must also register. The threshold usually rises by a few thousand each year, this year £85,000. Make sure you let HMRC know within 30 days, or risk paying a fine
As a partnership, although your business income will be taxed alongside your personal tax, it is vital to keep your business records and finances separate from your personal affairs, so we recommend you open a separate bank account for your business.
When you are in business, you are required by law to have certain insurance policies in place. This will depend on the industry you’re working in.
Keep accurate and up to date financial records, although there is no legal requirement to do so -it is best practice.
Once you start operating as self-employed, you will also need to pay not only any tax but your own National Insurance contributions (NICs).
If you know of a local business that needs help with business structure please do pass on our details. If you would like a free e-book on Tax Tips please like and share this post.