A partnership in the business sense is a group of two or more people who collectively run a business as its joint owners and share the profits resulting from it.  There are two kinds of partnerships.  The self-assessment partnership and the Limited Liability Partnership (LLP).  The reporting format for the partnership is a mix of a limited company and a self assessment partnership.  For HMRC a partnership return is required which reports the profit of the business and the split amongst the partners.  Each partner then has to include his/her split of the profit on their individual self-assessment tax return.  Profit is  therefore taxed under income tax rules. 

For a free one hour consultation on whether this is the best business format for you, please call 0845 680 2502 and ask to speak to Joanne.

Self-Assessment Partnership :  When you start trading, you must inform HMRC.  They will give you a UTR (Unique Tax Reference) for the partnership and expect a partnership tax return to be submitted annually.  You must inform HMRC within three months of starting to trade.  Refer to the sole trader page for more details.

Limited Liability Partnerships (LLP):  The LLP affords the limited liability offered by the limited company, but is taxed under income tax rules through self assessment.

The LLP is incorporated in the same way as the Ltd company, you need to complete the annual return like a limited company and abbreviated accounts to Companies House.  For HMRC the LLP is treated largely the same as the self-assessment partnership.

PAYE:  You can employ people in either form of partnership.  But do not need to employ yourselves as you would in a Ltd company. 

All employees working in your business need to be on your payroll.  You will pay them a salary for the work they do in the business (tax and NI will be deducted according to PAYE rules).

VAT:  You are required to register for VAT if you have made taxable supplies over £73,000 in the last rolling 12 months or expect to go over £73,000 in the next 30 days.  There are several different VAT schemes that you can choose.  For help choosing the one which helps you keep more of money that you earn.  Call 0845 680 2502