Trusted, experienced partnership accountants in Milton Keynes
Plain talking, down to earth and not a grey suit in sight!
Whatever type of partnership you are, traditional or LLP, we’ll take away all the accounting headaches both for the partnership and its partners. You’ll have minimum end of year fuss and maximum returns.
How Brilliant Accountants help Partnerships
Sometimes Partnerships are straightforward but often they are not.
We can take care of everything including initial registration of the partnership and its partners and its Partnership Agreement. We’ll do everything, right through to filing the year-end tax returns. You’ll receive first class support and advice from our experienced accounting team leaving you free to concentrate on your business.
What types of partnership are there?
This type of partnership requires at least two individuals who are both effectively self-employed but working together as a partnership. The individual partners share the profits the partnership makes and pay any relevant taxes individually.
Limited Liability Partnership (LLP)
An LLP is a more formal partnership and is an entity in its own right. This type of partnership often has a more complex structure and operates more along the lines of a limited company.
Ordinary Partnership or LLP, which is best?
Both types of partnership pay taxes in the same way and at the same rates. Individuals working together often use ordinary partnerships. For example, three builders might want to portray themselves in a similar way to a company, rather than as individuals.
LLPs are sometimes viewed as a more professional arrangement. For example, a group of solicitors or surveyors often form an LLP. LLPs involve a little more accounting administration but, unlike an ordinary partnership, the partners can limit responsibility for any debts they incur.
Frequently Asked questions:
How do you register a Partnership?
Firstly, regardless of the type of partnership, each partner will need to register individually with HMRC. They need to obtain a Unique Tax Reference (UTR) and submit a Self Assessment Tax return each year.
Once the UTRs are received, the nominated partner (the partner who is responsible for the administration and reporting for the partnership) needs to register the partnership with HMRC.
Although some clients attempt to register the partnership themselves we recommend they have professional accountancy assistance. An LLP, unlike an ordinary partnership, needs to be incorporated and registered at Companies House.
When do you have to register an ordinary Partnership?
It’s advisable to register your partnership with HMRC as soon as all partners are known and have their UTRs. This will also help you to acquire a bank account and any trade accounts you need.
When do you have to register an LLP?
It’s advisable to register your partnership with Companies House as soon as all partners are known and have their UTRs. This will also help you to acquire a bank account and any trade accounts you need.
What is a Partnership Tax Return (SA800)?
Ordinary partnerships must submit a tax return to HMRC each year. It will contain details of the partnership’s income and expenses and resulting profits. The profit is then split amongst the partners according to the partnership agreement.
How much tax do Partnerships pay?
Partnerships aren’t actually taxed. All income received by the partnership must be shared between the partners according to the partnership agreement. The partners are then personally taxed on their share of the profits.
How does the Partnership actually pay the tax to HMRC?
Each partner will receive profits from the partnership. That profit must be entered in the relevant section of each partner’s own personal tax return (SA100). It’s then taxed at the same rate as any other income included in the Self Assessment Tax return.
Do we need Accounting Software?
It’s advisable to invest in accountancy software such as Quickbooks, Xero or Sage. This will allow you to keep, maintain and manage your bookkeeping and make sure general record keeping is accurate.
What are the Tax Return Deadlines for partnerships?
The Ordinary Partnership Tax Return (SA800) needs to be submitted online by 31 January following the end of the tax year, at the latest. Each individual partner’s personal tax return (SA100) must be submitted online*. This must also be done by 31 January following the end of the tax year, at the latest.
So, for example, for the tax year 6 April 2023 to 5 April 2024, the tax return is due by 31 January 2025.
*There are a few exceptions where, if you are unable to submit a tax return online, you can complete a paper form and post it to HMRC.
The individual partners personal tax returns (SA100) need to be submitted online
* by latest the following January 31st after the tax year end.
In addition to the 31 January submission deadline, you must also pay your tax by 31 January. Deadlines can creep up on you before you know it. If you miss these deadlines HMRC penalties are now a lot more than in years gone by. They can cost you hundreds of pounds in fines unless you have a reasonable excuse (which is difficult to prove).
Does a Partnership need to register for VAT?
You must register for VAT if your turnover is over £85,000. You can register voluntarily if it suits your business. For example, this might apply if you sell to other VAT-registered businesses and want to reclaim the VAT.
What are the advantages of operating as a Partnership?
two heads, or more, are often better than one
more labour resources allow you to take on more work
it is easier and faster to set up than a Limited Company
many customers assume that you are a company
it looks like a Limited Company without the legal complexities
it's easier to raise finance and trade accounts, compared to operating as a Sole Trader
What are the potential disadvantages of operating as a Partnership?
initially determining a profit percentage split can be a challenge
HMRC has rules about later profit share changes
your personal liability for any debts is unlimited
generally, you will pay more taxes and National Insurance
difficulties can arise if a partner wants to leave the partnership
Get things right and don’t lose out
Invest in Brilliant Accountants to handle both the partnership’s and its partners’ tax affairs. This will ensure the partnership complies with all the mandatory filing requirements. It will also make sure you claim your relevant business expenses and don’t end up overpaying tax.
We are more than happy to answer any specific questions you might have. Please give us a call or complete the contact us form and we will get in touch. There’s no obligation on your part, this will just be an initial informal meeting or chat. We’ll see if we can help you with any accounting issues. We can check if there’s anything that may be looming that requires some tax advice and planning.
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Contact us today for all things accountancy & tax in Milton Keynes.