If you run your business as a partnership, you will be required to file a self assessment tax return each year. A nominated partner must register the partnership with HMRC and the nominated partner is the main point of contact between your business and HMRC. The nominated partner is responsible for completing your partnership tax return each year.
How do my taxes work if I am a business partner?
Partnerships are a relatively uncomplicated way for self-employed people to form a business together. There are various different ways to set up, from Limited Partnerships to Limited Liability Partnerships. In some cases, companies can actually be partners themselves!
When it comes to your personal taxes, HMRC will expect you to file yearly tax returns through the Self Assessment system. Running a partnership could make this a little more complicated than for a Sole Trader, so it's worth getting professional advice from RIFT. A lot of people end up paying too much tax each year, because they don't understand the trickier side of Self Assessment. Worse still, some find the taxman chasing them because they claimed expenses they weren't entitled to.
What kinds of tax returns will I have to file?
In addition to the Self Assessment tax return every partner in the business has to file, HMRC will want a return for the Partnership itself. Usually, all the partners are jointly responsible for the Partnership's tax return. Other than that, though, it isn't too different from the individual Self Assessment returns you each have to submit.
What are the good and bad points about partnerships?
Partnerships can be a great way to set up in business with someone you trust. They're not hard to establish, and can often borrow money more easily than Sole Traders can alone. You're also following the old "two heads are better than one" principle in your decision-making.
On the other hand, if one of your partners does something dodgy, you could all be held responsible. Equally, if the business itself doesn't stick to the rules, everyone ends up paying for it. You're basically sharing the workload, the benefits and the responsibilities.
Absolutely! RIFT are the UK's leading tax experts. We know all about forging winning Partnerships, and can advise on your Partnership's set-up, or even act as your official agent with HMRC. What's more, our specialist tax return service can solve all your personal and company tax return problems. We'll save you money and keep you on the right side of HMRC. Get in touch to see how we can help.