Do you remember when you were 18yrs you became an adult full of hopes and dream for the future looking ahead to new beginning or you just turn 18 yrs old you are full of dream and hopes for the future and you look ahead and see what you can do to make your mark in the world.
Whatever, your dream may be in 2018 it is the time to put them in action and start a partnership or get married and has a couple set that partnership. This introductory article will discuss the benefit of starting a partnership in life and in business.
Ordinary Partnership
Should you want to enter a partnership, it is easy two or more people can start a partnership and you will need to registered at the HMRC for Tax purposes. You'll be registered as an individual, sole traders and each one of you would need to register as an individual and the partnership itself.
Limited Partnership
If you want a limited partnership you would need to register the partnership at the company house and you would become a limited liability partnership which is a business structure that provides protection for individual partners against negligence of other partners within the business. It has it advantages and disadvantages too.
Avoiding conflict legal nightmare
You would need to set an agreement for a partnership simply call a partnership agreement detailing how you want the business to run, including each partners investment, how you intend to work together and how to implement changes to the partnership.
In the absence of a deed of partnership, the partnership act 1890 is used to legislate issues which may arise and you may not like the terms of it which may well be unsuited to the way you run your business in practice. So best to do one that suited to you.
Taxes of the business and Profits
Whichever partnership structure you would like to set up one of the partners must be designated as the 'nominated partner' and will be responsible and accountable for registering the partnership with HMRC and the company house should you want to be a limited liability partnership which main advantages are:
A member can be a person or a company, known as a 'corporate member'
Each member pay tax on their share of the profits, as in an ordinary partnership, but isn't liable for any debts the business can't pay.
In an ordinary partnership each partners pay tax on their share of the profits and are also liable for any debts the business can't pay.
As for any business structure you need to keep accurate and up-to-date records of all business transactions and accounts but the partnership itself will have to submit an annual self assessment as well as one for each partners. You'll pay income tax and national insurance contributions on the profits the partnership makes.
Try our Profit and Loss Calculator
Setting up an ordinary partnership
What you need to is three simple things when you set up a business partnership: choose a name and it must not be a registered trademark, or any official name use such as 'limited, PLL, or Official' or any name already used by another company or too similar name than another company uses.
Choose a nominated partner and register with HM Revenue and Custom(HMRC). The nominated partner is responsible for managing the partnership's tax return and keeping business record.
Setting up a Limited Liability Partnership
If you want to be a limited private company that would mean that the company is legally separated from the people who run it, has separate finances that the person who run it, and can keep any profits it makes after paying tax. Then you will need to incorporate your company hence register it at the company house.
Bear in mind that before registering your private limited company to the company house you would need to do this: have a suitable company name, a company address, at least one director, details of company's shares and at least one shareholder, and check what your SIC code is which identify what the company does.
The shareholders will need to agree to create a memorandum and articles of association which bare the written rules of the company, in addition details of the people with significant control over the company, for example anyone with more than 25% shares or voting rights.
Getting Married and starting a business as an ordinary partnership
The same as above applies for setting up but in term of tax you get benefit as you both person are basically registered as a sole traders and each partner complete a tax return.
Marriage Allowance let you transfer £1150 of your Personal Allowance which is £11500 each to your husband, wife or civil partner if they earn more than you. This reduce their tax by upto £230 in the tax year.
To benefit as a couple the lower earner must have an income of £11500 or less. Try the gov Marriage Allowance Calculator and to found more on Marriage Allowance click on this link and read all about it.
If you did not know about it and you never claimed before but you are already married and want to claim it you can backdate your claim to previous year to include any tax year since 5 April 2015 that you were eligible for Marriage Allowance. If your partner has since died you can still claim - phone the Income Tax helpline to get more information.
If you or your partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couple’s Allowance instead.
Married Couple’s Allowance could reduce your tax bill by between £326 and £844.50 a year. You can claim Married Couple’s Allowance if all the following apply: you are married or in a civil partnership, you're living with your spouse or civil partner and one of you was born before 6th April 1935
For marriages before 5 December 2005, the husband’s income is used to work out Married Couple’s Allowance. For marriage and civil partnerships after this date, it’s the income of the highest earner.
If you and your partner were born on or after 6 April 1935, you may be able to claim Marriage Allowance instead.
Conclusion
As setting up in business is an important decision to make, we recommend you talk to a local accountant before taking the plunge. They will be able to advise you on tax basics, as well as how to inform HMRC that you have started a new business.
If you want to set up a limited company there is a government fee to pay and there is company such as The Company Warehouse which will do all the required document for setting up a limited company for you.
If you like this article please feel free to comment and share with your peer. Start your business in 2018 it a good year to start-up and start making money.
Do contact us for all your marketing need at Girlfridayz we can help you start-up with traditional marketing, digital marketing, an online presence (website, blog, social media) and more...
Oh, for those of you who already in business to avoid a hefty government penalty and interest do not forget to do your Tax Return online before or on the 31/01/18.
If you need help we can do an excel or google sheet for you with the record of your income and expenses monthly and we can help you fill in the online tax return form if all your records are accurate, up to date and ready to input online. Visit us for this service here for business start up and if you already running your business visit us here