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Setting up and running a business partnership in the UK

In Britain, there are several corporate structures that you can choose from, with one option being to create and manage a business partnership.

This type of firm does not have directors and is not owned by shareholders. Instead, individual partners own and run the business, with each jointly responsible for the actions of the other.

How to begin

The set-up process is relatively easy. First, you need to choose a company name and decide who will act as the ‘nominated partner’. They are responsible for making sure that certain tasks are carried out. Once you have done this, you can register your partnership with HMRC.

You also need to draw up your partnership deeds, which should be done with the help of a solicitor. Bear in mind that the deeds define the responsibilities of each partner, and, importantly, what happens should something go wrong. Bear in mind that with a business partnership, your personnel assets can be used to service the debts of your company, so this legal contract is one that you need to get right and understand in full.

The accounts

This form of enterprise runs in the same way a sole trader or limited company, and has the responsibility to pay the usual taxes. This means that from the very start, you need to keep detailed accounts.

The nominated partner is the person that will be held responsible for ensuring that the firm’s tax return is completed on time. They also need to make sure that the business registers for VAT when necessary, and that the partnership pays its taxes on time. This includes registering for and paying corporation tax when the firm’s turnover reaches the appropriate point.

There is no need for a business partnership to send annual accounts to Companies House. In addition, because there are no shareholders, it does not need to produce a set of members’ accounts.

Each partner takes a percentage of the profits, which is usually based on the amount that each has invested in the business or the amount of work they do. Every partner needs to fill out an annual self-assessment tax return to make sure that they pay the tax owed on the profits that they take from the partnership.

If you are running a partnership, getting your accounts and tax right is vitally important. You are personally liable for any errors that are made with your taxes, while personnel assets can be used to pay any fines or outstanding duties.

Posted by Louise
July 4, 2015
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