If you wish to go into business with an associate and would prefer to do so without setting up a limited company, a partnership is one of the best ways in which to get started.
Such an arrangement can give you the ability to link up with you associate within a simple business structure, although there are several considerations you should be aware of, including those relating to tax and other legal issues. Those who operate an umbrella company can also benefit from this information.
One of the first things you should remember when setting up a partnership is the fact that any debts incurred in the running of the business are the personal responsibility of the individual partners within the business.
There is no need to notify the Companies House when you set up a partnership, while you will also not have to deal with any accounting requirements, which are often necessary when you are part of a limited company.
As a partnership, you will not need to notify Companies House, nor deal with any administrative or accounting requirements which are required of limited companies.
When you begin the new business, the first thing you need to do is to ensure that you and your business partner inform HMRC that you are self-employed.
The partner’s business income should be counted alongside their existing personal income, meaning that the accounting side of the partnership should be relatively simple.
When the time comes to fill out your tax return, simply submit a self assessment form to HMRC and keep accurate and up-to-date records of all business transactions and accounts to ensure that you always stay on the right side of the taxman.
It is important to remember that this process needs to be done both on an individual basis and as a business. In order to make sure that you stay on top of your taxes, it is always a good idea to hire a company accountant, who can answer whatever questions you may have.
Although setting up a partnership is always a great way to do business, it is always important to ensure that you are prepared for any future eventuality.
One of the things that is worth bearing in mind is the fact that if a partner leaves the business for whatever reason, whether its a resignation or even a death, the partnership has no legal status and must be dissolved instantly.
It is also important to remember that although many people enter partnerships with the best of intentions, there is always the possibility that problems can develop later down the line, meaning that being prepared for any eventuality is crucial.
For instance, if a partner finds that they want to purseu a different course of action for the business, or wants to leave, it essential to make sure that you have a deed that offers details on how the business will be run, including how much each partner invests, how they intend to work together, and how to deal with any changes.
If there is no such agreement, then there is always the Partnership Act 1890, which is often used to legislate any issues that may arise.