What does my accountant need to tell me about Partnerships?

As has been previously covered on the Sherwin Currid (http://www.sherwincurrid.com) blog, for those wishing to start a business in the most hassle-free possible way, the option exists to begin trading as a Sole Trader. This removes much of the administrative burden of that other option, Limited Company formation, but what would a good tax accountant in Surrey recommend if there is more than one of you wishing to go into business together?

Well, in that situation, a Partnership is the closest equivalent to Sole Trader status. Although it is a more complicated process than that of becoming a Sole Trader, entering into a Partnership still somewhat simplifies the tax and accounting process. A standard Partnership lacks any legal status, as would be the case with a Limited Company. It simply links together two self-employed individuals in a basic business structure, with the partners having personal liability for any debts that they incur in running the business.

Those who desire the separate legal status that is enjoyed by a Limited Company are advised by our Guildford accountants to register a Limited Liability Partnership with Companies House. As the name suggests, this arrangement limits the liability of the partners for the debt that they incur in running the business, giving them a similar status to Company Directors. Nonetheless, given that the business profit of each partner is taxed alongside their existing personal income, a Partnership does not usually cause too many accounting headaches.

For tax purposes, when the business is started, each partner will need to inform HMRC of their self-employed status. Sherwin Currid's accountants in Woking frequently advise on choosing the right business name for the Partnership, with any 'offensive' words needing to be avoided. Nor are you permitted to use certain 'sensitive' terms, like 'Chartered', 'Authority' or 'Council' that imply any special status that does not exist. Trademarked names, such as 'Microsoft', will also need to be avoided in your business name. In the case of Limited Liability Partnerships, Companies House must accept the proposed name.

Partners are urged by our accountants in Guildford to keep accurate and up-to-date records of all business transactions and accounts. These will be needed in a standard Partnership for the submission of an annual self-assessment form, complete with Partnership page, to HMRC. Self Assessment forms must be submitted yearly by not only each partner, but also the Partnership itself. All of these entities will need to be registered for Self Assessment, which will involve income tax and Class 4 National Insurance Contributions being paid on all profits.

There are also various legal issues that you will need to be prepared for when you enter into a Partnership, and our small business accountants in Woking and accross Surrey can advise you on all of these. Contact Sherwin Currid (http://www.sherwincurrid.com) for more information on our expertise in relation to Partnerships, including Limited Liability Partnerships.

Editor’s Note: Sherwin Currid (http://www.sherwincurrid.com) is represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Please direct all press queries to Louise Byrne. Email: louise@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.