Starting a Business Partnership
In a partnership, you and your partner (or partners) personally share responsibility for your business. This includes any losses your business makes, and bills for things you buy for your business, like stock or equipment. Partners share the business’s profits, and each partner pays tax on their share.
A partner does not have to be an actual person. For example, a limited company counts as a ‘legal person’ and can also be a partner.
Checklist of initial things to consider when starting out:
- Choose a business name, or you can trade under your own names. Whichever option you choose, you must still display the partners’ name on all business invoices, quotations and stationery, as well as on your website. Choosing a business name does not protect the name or stop anyone else using it – consider registering it as a trademark if the name is of particular importance to you.
- Choose a ‘nominamted partner’. This partner is responsible for managing the partnership’s tax returns and keeping business records.
- Register the partnership with HMRC. You must register by 5th October in your second tax year, but we recommend you do this before or at the same time that you start trading.
- What level of turnover do you anticipate in a year? If more than £85,000 pa you will be required to register the partnership for VAT. Competex can advise and, if necessary, do this for you.
- Will you be employing others to work in the business? If so you will need contracts of employment for them and will need to operate payroll services, including filing returns with HMRC. Competex offers a full payroll service for any employees you have.
- Check with your local authority whether you need to pay business rates or need a special licence to carry on your business
- Consider what insurances you might need such as public liability, employers’ liability (mandatory if you have employees) and professional indemnity
- There is no legal requirement to set up a separate business bank account, but unless your business is very small, with nominal transactions, it is usually a good idea to do so. This means that the partners’ personal transactions do not get mixed up with business ones and it is clearer to see what money the business has available and how it is doing.
- How will you manage the book-keeping? Recording all your transactions using a simple accounting package is the easiest way forward and saves a lot of time and effort compared to keeping manual records. Competex can provide you with such a package, along with unlimited support.