I am looking for help on how this works. If two people set up a company together as a partnership and both register as self employed but neither of the partners is a limited company then does this not make them an official partnership? For accounting purposes would they only need to calculate the income and expenditure and split it when they both come to fill in their tax returns?
When they register as self employed they register the partnership with HMRC at the same time. The partnership is allocated a UTR as well, and at the end of the year there are 3 tax returns to do. The main income and expenditure goes on the company return and then a summarised version of the split between the partners goes on the individual returns.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
Awkwardly enough, a regular partnership can use the word Company or Co. in its trading name, but not the word Limited or PLC.
In the absence of a 'Partnership Agreement', if they are in business together to make a profit, you are right, there is a partnership. Unless they have agreed otherwise the profits on their tax returns will be split 50 : 50.
I'll let someone else get into Limited Liability Partnerships
best regards,
TIm
-- Edited by Don Tax on Tuesday 9th of August 2011 10:52:02 AM
Sorry I was a bit slow this morning, I have to write a report for Steve's records before I delete anything or ban anyone.
The attached links were to the same source as a previous userid from a different IP address so this one obviously really likes the site!
Talk later,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I agree with the point made by Tim, the distinction between business and company is very important. Many sole traders have a business which they refer to as a 'company', but obviously if they are trading as a sole trader, the tax position is very different.
Has a posting on this thread been removed or was the original question spam? If so, i fell for it good and proper! Might as well have been trying to sound snotty.
Keep hearing this recently, including the Revenue PAYE office - first question last week was "which company is it" as if no-one else is an employer.
it was another spam attack (between your post and Tony's).
They're happening with increasing regularity. Sometimes site admin pick them up and other times it's me.
In this instance the spammer hit five threads but this was the only one that anyone commented in so I added a comment just so people would know that something had disappeared.
In hindsight as comments had been passed maybe I should have just deleted the contents rather than the post. Unfortunately I was on a role from deleting the others so didn't stop to make the right judgement call on this one. Sorry about that. I realise now it makes Tony's post sound completely out of context.
Anyway, at least it's back to being a squeaky clean spam free thread (for now! this one has been hit before... Don't know why spammers get so attracted to it?).
Right, off doing paying things again.
Talk later,
Shaun.
P.S. Tony, if you read this let me know if you want me to change or delete your thread (don't just want to do it without permission from yourself first).
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Ahhh Shaun, i get it now, derrr. By all means, carry on deleting. Some of the trolls seem strangely familiar from Accounting Web and, strangely enough, AOL Pub Quiz.
You were asking about limited liability partnerships ( LLP)s.
I've operated a number of businesses through LLPs... why?
The set up is similar to a limited company that is the LLP has a separate legal entity, which means it can sue or be sued, make contracts and there is limited liability in the event of the LLP going out of business ( i.e. creditors cannot access your personal assets).
The main difference is in the tax on an LLP
With an LLP the individual partners are taxed on their share of the profits under the self assessment system. A tax return is submitted for the LLP partnership as a whole and each partner submits their own tax return including their share of the LLP profits.
By contrast companies pay corporation tax and directors are employees of the company and have tax deducted under PAYE scheme.
One other point on partnerships there is an assumption of equal profit shares in a partnership, but this can be changed to reflect different contributions. I strongly recommend that a partnership agreement is drawn up that states what will happen in certain circumstances ( for example if one partner cannot work as many hours as the remainder, difference in view on strategy etc).
