A partnership business is a type of corporation where the owners have unlimited personal liability for the business. The owners also have a share in the profits (and losses) generated by the business.
In a partnership, a number of individuals sign a business partnership agreement to establish how the company’s ownership, profits and liabilities are shared between them, and how partners may leave the partnership.
A partnership is similar to the sole trader structure, except that there are at least two of you. There is no legal upper limit to the number of partners, though very large partnerships can be riskier to manage (see limited liability partnerships). Each partner registers as self-employed and submits a separate tax return. Your tax and NI obligations are similar to those of a sole trader.
Partnership business advantages
- The advantages of a partnership business are flexibility and simplicity, with the added bonus of having more owners to run the business.
- A partnership allows a business’ tasks/responsibilities to be assigned to each partner depending on their skills, which takes the stress off just one person.
Partnership business disadvantages
- In a partnership, all partners are jointly responsible for all the business debts. This means for instance that if one partner is sued successfully, all partners must share the damages.
- The possibility of disagreements/not being able to come to an agreement on how the business is run.
- Taxation laws say that all partners must pay their own tax, just like a sole trader would. Also if a partnership business obtains a certain level of profits, the partners may be faced to pay more than they would in a limited company.
How can we help with partnership accounting?
A partnership has many procedures and rules that must be followed. For example, a partnership business must prepare its own tax return, and declare any profits earned by the partnership on a personal tax return.
Tax returns can be an overwhelming process, so let Hysons, Chartered Accountants take away the worry of incorrectly completing them. By preparing end of year documents that provide you with statutory accounts and all required tax returns, you needn't worry about breaking any rules. On top of this, we will ensure you are aware of all deadlines and how to pay them.
We can also help with setting up a business partnership and registering it with HMRC, providing you with a strong foundation to build your brand upon and ensuring you follow all necessary regulations.
Why choose Hysons?
At Hysons, Chartered Accountants in Hampshire, we will be an extension of your business, enabling you to grow even further without the hinderance of compliance regulations and tax worries. By tailoring our solutions to best suit the needs of your partnership, you can trust your investment will yield great results both internally and externally. To find out how you could benefit from our partnership accounting services, contact Hysons and book a free accounting consultation.