Partnership Tax Return
A business run as a partnership shares control, responsibility and finances between 2 or more people. The partners are not only responsible for managing the business, but also “jointly and severally” liable for any debts incurred by the business and the profits are shared between the partners based on pre-agreed percentages.
Business Partnership Advantages:
Business partnerships are relatively easy to establish; make sure time is taken to draft a partnership agreement to avoid future problems. With more than one owner, it may be easier to borrow money and raise capital to invest in the business.
The business can benefit by using the knowledge base and experience of all of the partners.
Business Partnership Disadvantages:
Business partners are liable for the actions of the other partners. Business partners, like sole traders are liable for the actions of the business. Since decisions are shared, disagreements can occur and therefore the decision making process can take longer.
Partnership Tax Returns
If your business is run as a partnership you’ll have to complete an individual Self Assessment tax return. If you send a paper tax return, you’ll also have to fill in the partnership supplementary pages.
The nominated partner must also complete a Partnership Tax Return - showing each partner’s share of the profits or losses. This might include supplementary pages too, depending on what types of income the partnership has.
A Partnership Tax Return needs to be submitted to HMRC before the end of October each year. These can be submitted in paper format or online using HMRC compatible software. It can sometimes be easier to calculate the Partnership Tax return at the same time as preparing both partner’s self-assessments, this way nothing will be missed.