Accounting for Partnerships
We can help you fulfil your partnership potential
Are you looking for an experienced accounting firm to help your partnership business really take off?
Quay Accountant’s team of professional chartered accountants can help you understand the ins and outs of partnership accounting to save you time, make money and become more tax efficient and grow your bottom line.
We understand the unique challenges that come with running and managing your own business, and we are here to take the burden of accounting off of your shoulders. We can help ensure that all aspects of your partnership accounts run smoothly so you can focus on developing your business.
For a free partnership accounting consultation, please get in touch.
What is a partnership?
A partnership is a simple business model between two or more individuals who share the profits and losses of the business. Each partner contributes to the business financially and works together to manage the day-to-day operations.
Partnerships are often used for small businesses and start-ups, as they provide an easy and cost-effective way for people to join forces and grow a business.
What are the key features of a partnership?
There are different types of partnerships, but common features of a partnership include the following:
- Each partner shares the risks, costs and debts of the business
- Profits, gains and losses are shared among all partners
- Management and control of the business are shared
- The partners must each be registered with HMRC and submit self-assessment income tax returns as well as partnership tax returns
- Partnership accounts must be kept to show income and expenses
What are the different types of partnerships?
The different types of partnerships are:
- General partnership (GP): This is when two partners, or more, own a business together and are jointly responsible for the debts of the business.
- Limited partnership (LC): A limited partnership includes one or more general partners who are fully liable for the debts of the business and one or more limited partners whose liability is limited to their investment in the business.
- Limited liability partnership (LLP): In this type of partnership, each partner has limited liability, meaning that they are only liable for the debts of the business up to the value of their investment.
How do you start a new partnership?
A partnership is one of the more simple business structures and can be established relatively easily.
You must choose the ‘nominated partner’, who is responsible for accounting, registering with HMRC, registering for VAT if applicable, and submitting and filing the partnerships’ tax returns. The other partners’ must also submit self-assessment tax returns.
It’s essential to create a partnership agreement, which is a legally binding contract to help protect the interests of all parties.
It should outline the roles and responsibilities of each partner, along with details on profit sharing, decision-making procedures, dispute resolution and dissolution of the partnership.
What tax do partnerships pay?
There is no tax on the partnership itself. Each partner must register with HMRC and submit a Self Assessment Partnership Tax Return each year to declare their share of the profits and expenses.
The percentage of profits each partner receives can be divided any way you choose and should be set out in your partnership agreement.
In most cases, a general partnership does not need to register or file annual accounts to Companies House.
Tax law is challenging, and mistakes can be expensive, which is why it’s valuable to consult an expert on partnership accounting.
What chartered accounting services do Quay accounting offer for partnerships?
At Quay Accountants, we love nothing more than supporting ambitious partnerships and start-ups to help them grow. We offer a full service and wide range of partnership accounting services which include:
- Annual Accounts
- Xero cloud software (online accounting services and software)
- Self-Assessment Tax Returns
- Management Accounts
- PAYE & Payroll
- Registered Office
- Tax Returns
Why choose us as your partnership accountant?
At Quay Accountants, boosting clients’ profits is what we do best. We are professional and highly qualified chartered accountants, but also friendly and approachable. We believe in fair and transparent working and you can rely on us to cut the jargon to get straight the point.
Our partnership accounts services include tax planning, bookkeeping and payroll, which we deliver on a bespoke, fixed-fee basis.
For a free partnership accounting consultation, please fill in our contact form and we will be in touch.
What’s the difference between a partnership and a company?
The main difference between partnerships and companies is a matter of liability.
Limited companies are a separate legal entity from their owners, meaning that they are owned by shareholders (who have limited liability) and run by directors.
In a partnership, the partners are not legally separate from the company and so are jointly liable for all debts of the business.
Which is best, general partnership or LLP?
The best option for you will depend on your individual circumstances, goals and objectives.
That is another reason why it’s so valuable to get the advice of a partnership accounting expert to ensure you choose the right business structure for you.
How do partnership partners get paid?
Partners generally are not paid a salary, instead they withdraw funds from partnership earnings (similar to that of a sole trader).