Partnership
Set up: Each partner will need to register with HMRC as self-employed (tel 0845 915 4515).
You should also arrange to have a written partnership agreement in place.
Accounting records: Each partner will have to make an annual Self Assessment Tax Return to HMRC and a Partnership Return must also be submitted.
The partnership must also choose an accounting year end date and keep records showing its income and expenditure.
Profits: All profits after tax are split between the partners at an agreed percentage.
Tax & National Insurance: Each partner is taxed on their share of profits as income. Each partner will also pay flat rate Class 2 National Insurance contributions (NICs) and Class 4 NICs on their share of profit.
VAT: If the partnership turnover exceeds the registration threshold you need to register for VAT. Alternatively you can register voluntarily. See VAT page for more detail.
Liability: As a partnership, each partner is jointly and severally liable for any debts incurred by the partnership. This means that your home or other assets may be at risk if your business runs into trouble.
Business stationery: Business stationery must include the following:
• Business name
• Names of all partners
• Business address
• VAT registration number if appropriate (invoices only)
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