Partnerships can be a smart and practical way of starting a business with someone you can trust. They are not that hard to set up and acquiring start-up capital is usually not as complicated as opposed to acquiring it as a sole trader.
In order to stay competitive and profitable, all partnerships require sound legal advice â€“ completing your self assessment tax return for partnerships requires certain rules which need to be strictly followed. Unfortunately, these rules can be very complex to adhere to.
All partners in an organisation are taxed based on their profit share for the tax year. Furthermore, each partner is taxed as a self-employed business; i.e. with profits which are equal to his/her share of the organisationâ€˜s profits.
Therefore, itâ€˜s important to keep in mind that rather than your tax being deducted from your gross earnings, you need to be prepared to pay it sometime in the near future. This can prove to be a nagging thorn in your side if you have failed to put aside some money for this purpose.
Our professional partnership tax return accountants know exactly when your partnership is likely to get hit by tax payments. However, keep in mind that this can be somewhat difficult to determine if your company records are not up to date or if it is your first year of business.
As a partner, you need to complete two types of tax returns:
Every partner in the firm has an obligation to complete the partnership tax return. Therefore, the total profits, losses and other income the partnership has incurred are allocated to each partner on the tax return as per their respective profit entitlement.
Every partner must complete his/her own tax return individually. The partnership pages must be completed, for example, according to what was entered into the partnership return.
As far as personal taxes are concerned, you are required to file annual tax returns and submit them to HMRC. However, in a partnership, this could be a complicated process which is why you should always seek professional advice and guidance from a qualified tax accountant.
Many folks inadvertently pay more tax than they should, because they often fail to come to terms with how tricky partnership tax filing can be. In fact, in a worse-case scenario, some people may find themselves in a difficult position with the taxman because they didnâ€˜t know what expenses needed to be claimed.
With Selftax's easy-to-use online software, you can file your partnership tax return in a few simple steps. Bear in mind that the deadline for filing your partnership tax is the 31st January after the tax year has ended. Why make matters complicated for yourself when you can easily do this yourself online?