If your business is a partnership, there are some extra rules and regulations you must comply with. You can register your business partnership directly with HMRC.
As well as the partnership having to complete a partnership tax return annually, each partner will need to complete a personal self-assessment tax return.
What Business Records Do Partners Need to Keep?
It is really important that you keep accounting records for your partnership business as you are responsible for reporting the information to HMRC correctly.
Make sure that you keep:
- The invoices you raise to your customers
- Receipts to back up all purchases and expenses
- Bank statements – ideally you will have a separate account for the business
You need to keep all of these documents somewhere safe, either in a file or online.
There are lots of software packages (we use Xero) out there to help keep your bookkeeping and accounting records straight and to help you to keep track of where you are with your finances at any point in time.
What Expenses Can You Claim?
We all want to know how to reduce our tax liabilities don’t we? So, as a partnership there are all sorts of expenses that you can claim. The general rule is, was the cost incurred ‘wholly and exclusively’ for the purpose of the business. In other words, would you have bought it if you didn’t have the business?
Every business is different, but areas to consider are:
- Supplies/equipment that you purchase to sell on to your customers
- Travel costs – including mileage, parking and public transport
- Protective clothing (such as steel toe cap boots) or uniforms with your business name on – sadly you can’t claim day-to-day clothing that you purchase for work
- Staff costs, if you have employees
- Advertising, website hosting, business cards
- Computer equipment – such as laptops and printers
- Stationery – including pens, notebooks, stamps
- Business telephone costs and internet (if it’s a dedicated line)
- Business premises costs or use of home as an office (calculations can be found on HMRC website)
- Training – only to enhance an existing skill
How Do Our Accountants Work Out Profit?
In simple terms, you will pay tax on the invoices you raised to your customers, less the allowable expenses that you incurred.
So say you invoice your customers £35,000 during the year, but had expenses of £10,000, you will only pay tax and National Insurance on £25,000.
As you are in partnership, the profit will be split equally between the partners, unless you have a partnership in place that states otherwise, and this will go on the partnership pages of each partners self-assessment tax return.
The partnership does not directly pay taxes to HM Revenue & Customs, the partners do this via their personal tax returns.
To get help and advice from our accounting team, complete the form to get an instant quote
When Zebra files your Partnership Taxes for you, we give 7 days of meals to a nursery child in Ethiopia