If you run a business and are considering a partnership, there are certain things that you need to be aware of. Creating a partnership is more than just finding a partner and this is because it is a type of business structure and so, partnerships must be registered with HMRC. This ensures that HMRC is aware of the partners and it ensures that everyone pays the right amount of tax. Furthermore, the partnership will also have a partner who is nominated to handle all administrative tasks which will include registration of the partnership.
Setting Up a Business Partnership
It’s possible for anyone to create a partnership and the process of registering it is simple enough. Therefore, a nominated partner will be named and they will have to keep all necessary records and paperwork while they will also have the responsibility of registering the partnership.
To register a partnership, for self-assessment, you will need to submit an SA400 form. This will ensure that the partnership is registered for self-assessment and that HMRC knows what to expect when it comes to tax returns and who pays tax. As a result, the partnership will have a Unique Taxpayer Reference Number which will differ from that of each partner.
What is Required to Submit an SA400 Form?
When you submit the SA400 form to HMRC, you will need details of the partnership and this will include the name of the partnership, what the business does, the address and when it commenced.
Will Partners Need to Separately Register?
This is a requirement which means that each partner will need to register with HMRC and even if they are already known by HMRC, they will have to confirm that they are a partner within this partnership. Therefore, they will still have to take responsibility for their tax returns as well as make payments for National Insurance and tax.
Is a Partnership Agreement Required?
A deed can be drawn up by the partners and this document will be considered legally binding. It is not a compulsory requirement to have this in place but it can help to prevent disagreements in the future. The document will clearly state what each partner is responsible for, what rights they have and how the partnership should operate.
In the case of a normal partnership, each partner is responsible for any debts in the same way that a sole trader is. It is common for partners to run the business together which means profits and losses are shared. However, this is not always the case as it does depend on the partner and whether a deed of partnership has been created.
A partnership comes with many benefits and it means that a business can be run by several people. However, a nominated partner has to be named as being the one responsible for keeping everything on track. Fortunately, the process of registering with HMRC is straightforward and can be completed in very little time.