Running your business as a partnership is no easy feat, and when it comes to finances, you need to make sure you have processes in place to let the HMRC know what has been earned and what your expenses have been during the year. Self-assessment tax returns are important every year to notify on travel expenses, mobile phone calls and postage, as these things are all deductible from your tax returns. Returns have to be completed for each partner involved in the business you run together, so don’t assume that one return covers all of you.
What is a Partnership?
There are more questions out there of course, but the most popular questions are listed below. Running a business partnership is sometimes difficult and while a partnership is a smart business idea, it’s important to make the right choices in your business. You don’t have to set up as a limited company. A partnership is the way to link two or more people in a very simple structure for business.
Usually, those in a partnership are self-employed individuals and when choosing to go into a partnership, one person is designated as a ‘nominated partner’ and that is the person who has to be in charge of paying the taxes and dealing with the partnership registration with HMRC.
Some Questions Asked
Some of the questions you can find being asked regularly by partners looking for partnership tax return forms are included below, along with common answers:
1) Do I have to complete a self assessment tax return?
If you are a not a permanent employee then yes, you need to fill out a self assessment tax return form. Any overseas income and savings or investments income also needs to be filled out. This includes if you are a landlord. Basically, if you have any income that the tax man should know about, let them know!
2) What are the common reasons for filling out a tax return form?
Whether you are a priest or a company director, you need to fill one out. If you are in a partnership, you need to fill out partnership tax return forms.
3) When is the deadline?
All self-assessment deadlines are 31 January when doing it online, or 31 October for paper returns.
Partnerships – In It Together
Income from all partners counts alongside any existing personal income from each, so accounting is generally fairly straightforward. Annual self assessment forms have to be submitted for each partner, and income tax and national insurance has to be paid on the profits the partnership manages to make. Always remember that if for whatever reason one of the partners has to withdraw from the overall business, the partnership will be dissolved immediately. There is no legal status here and there are companies out there that can help you to deal with this and all tax and partnership tax return issues you may have. As a partnership you work together, so work your HMRC forms together too.