A partnership, is similar to a sole trader but with 2 or more people. A written agreement and profits between the partners are usually shared between the partners according to the agreement. Though profits may be shared unequally, raised liabilities are shared jointly. This is an important note to be well aware in partnership including even if you own 1% of the business, you will still be responsible for 100% of the liability.
What to do when you are in a Partnership.
- Register as an independent with HMRC within 3 months of your setting up
- Pay Class 2 National Insurance contribution – HMRC will send you Class 2 National bills every quarter, unless exempted due to small gross.
- Set up a separate or a particular business account If possible – Ask us if you need to open an account
- Finish an individual Self-Assessment tax return. You’ll need to fill in the partnership supplementary pages – SA104.
- The nominated partner must also finish a Partnership Return – SA800 – showing each partner’s share of the profits or losses.
National Insurance (NI).
If you are independent or self-employed as a sole trader or a partner, you need to pay two types of National Insurance:
Class 2 National Insurance that is firmed at £2.85 per week Class 4 National Insurance on your taxable profits at:
9% on the profits betwixt £8,164 and £45,000 Plus, 2% of any profits over £45,000.
If you are an employee, or a Director of your own Limited Company, there are three types of National Insurance to worry you. The most usual rates, unless you are contracted out of the state pension scheme are:
Employees class 1 National Insurance (paid by you) – First £8,164 per year – nothing Next £36,868 – 12% all above 45,032 – 2%
Employers class 1 National Insurance (paid by your company)–
First £8,164 per year – nothing all above that – 13.8%
There are exemptions for startup businesses in some parts of the country for 12 months for up to 10 employees, capped at £5,000 per employee (for earnings paid up to 5 September 2013).
Class 1A National Insurance (paid by your company) – Paid on the advantage of benefits provided by your company – 13.8%.
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