What is a Partnership?
A partnership is a collaborative business structure where the profits from the business are shared among the individuals within the partnership. Partnerships are becoming more popular as they can achieve economies of scale and they’re a sensible way to share workload, which can lead to the ultimate goal of a better work/life balance. When it comes to tax returns, they can help to reduce your liability when you’ve fully exhausted sole trader tax planning.
As with any business structure, it is important to weigh up the advantages and disadvantage to ensure it is the correct structure for your business at this time. Important to considerations are:
- Reason for partnership
- Who will be in the partnership
- Tax Implications
- Partnership Agreement
- TAMS II
- Young Farmer Scheme
- Accounting Structure
Why a partnership?
It's important to note that individual partners own a share in the partnership and any assets acquired with partnership funds belong to that partnership. They’re a logical move for those who have been sole traders, as partners are treated in a similar way to sole traders for Income Tax purposes. Each partner is taxed on their share of the profits and can opt into income averaging independently of each other.
Get in touch with one of our experts todayRobert Johnson - Senior Tax Consultant
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