DO PARTNERSHIPS NEED AN ACCOUNTANT?

Many sole traders, partnerships, and limited liability organisations believe they require the services of an accountant. The truth is that until your partnership is large enough to undergo an audit, there is no legal requirement to have your accounts produced by an accountant.

Partnerships aren’t taxed at all. The partnership’s income must be split equally among the partners. The partners are then taxed on their respective shares of the profits.

Because partnerships can be divided in any way you like (as per your partnership agreement), everyone will earn a share of the profits you make together.

Individuals who own a portion of a partnership’s profits are taxed at the same rates and bands as self-employed income (basic, higher and additional rate).

Assume A, B, and C are three partners splitting a £100,000 annual profit. Partner A has a 60% stake, Partner B has a 25% stake, and the third has a 15% stake. They’d be taxed for £60,000, £25,000, and £15,000, respectively, implying that Partner A would be on the higher Income Tax rate, at the very least, compared to partners B and C’s basic rate (as of 2021/22).

Of course, if all or some of the partners have other sources of income, their entire earnings may be pushed into the higher or extra rate categories. To calculate your taxable income, HMRC adds up all of your earnings and subtracts deductions and allowances.

The date for filing your partnership business tax return is the same as for Self Assessment: midnight on January 31st for digital submissions, and three months earlier on October 31st for paper filings.

Remember that the first period you must report is from your start date to April 5th, so make sure you don’t forget.

This is a tax return for the prior fiscal year. For the 2023/24 tax year, for example, you’d file online by January 31, 2025.

If you miss the deadline, each member of the partnership will be fined £100 right away. Penalties accumulate in the same way they do for a late Self Assessment tax return. They have an impact on each partner individually; you are not held accountable as a whole.

If you don’t pay on time, you’ll be charged more.

Every partnership must complete out eight pages of the SA800. It is your obligation if you are the nominated partner.

However, there are a few more pages for your tax partnership that are equally crucial. They’re employed for bank or building society profits, as well as the ‘disposal of chargeable assets.’ These supplemental elements of the SA800 form must be completed by the nominated partner.

For a partnership tax return, you’ll need the most recent, up-to-date evidence, as always. HMRC may request evidence of all incomes and investments.

You’ll have to fill out one of two Partnership forms: a’short’ version for the types of revenue we’ve discussed so far, or a ‘complete’ declaration that covers every type of income you could earn from the partnership. If your trading income is less than £90,000, you’ll fill out the SA104S, and if your partnership income is greater than £90000 or you have more complicated partnership arrangements, you’ll complete out the SA104F.

To give their consent, all members of the partnership sign a document. After that, a copy will be made and included with personal Self Assessment tax filings. That’s all there is to it when it comes to filing a partnership tax return appropriately.

Every tax partnership in the United Kingdom is required to file a tax return by the deadline, whether on paper or electronically. Those who fail to file on time are automatically fined by HMRC.

You can, on the other hand, request a reduction or cancellation of the penalty. You have 30 days to explain yourself if you were late. The following are some valid reasons:

• When you tried to submit, HMRC’s service was down, or your own software was having issues.

• You were unable to send it due to theft, fire, or flooding.

• You or your partners were unable to complete their portion of the tax return due to a serious sickness.

• Shortly before the deadline, one of the partners passed away.

• There were postal delays.

If any of these apply to you and your partnership tax returns were late, you may be successful in any appeal against late filing penalties.

Limited company accountant services, sole trader accountant services, partnership online accountant services, online limited liability partnership services and contractor online accountant services