PARTNERSHIPS & LLPS

A Partnership

A business partnership is two or more individuals working together. You will need to register the partnership and its partners with HMRC for self- assessment, and, NI contributions for each of the partners.

All the partners will share responsibility for the running of the business and the profit or losses from the business are shared between the partners.
Each partner is responsible for their own tax payments on their share of the profits.

It is sensible to set up a formal partnership agreement, defining the responsibilities of each partner and the allocation of the profit shares.

You may wish to take on staff or use sub-contractors in the business, in these circumstances you must account for the tax on your employees through the Pay As You Earn (PAYE) system, or the Construction Industry Scheme (CIS) for sub-contractors.

If your business turnover exceeds £85,000, you may have to register for VAT, account for VAT on your sales and purchases and submit monthly, quarterly or annual VAT returns.

You will be required to prepare partnership accounts annually, and submit a partnership tax return to HMRC.
In addition each partner will have to submit an individual tax return to HMRC and account for their own tax on their share of any profits from the business.

Limited Liability Partnerships (LLP)

An LLP works like a partnership but it is incorporated at Companies House. The main advantage of an LLP over a partnership is that the members (partners) are not personally liable for the debts of the LLP, so their own assets e.g. cars, houses, etc, are protected.

LLPs are taxed in the same way as a partnership but there is additional administration involved in preparing accounts to be filed at Companies House and an Annual Return is required each year too.

All of these services can be taken care of by the team at Emma Pickles Accountants, leaving you free to concentrate on running a successful business.