Hassle free management of your accounting needs through our accounting service for partnerships
A partnership exists to carry on a business. As a partner you should seek to generate profits for your business. Our Partnership accounting services are designed to help you increase profitability of your partnership business.
The accounting for a general partnership is principally the same as is used for a sole trader, except that there are more owners. You are required to keep a separate account tracks for each partner’s investment, distributions, and share of gains and losses. Heighten Accountants have dedicated accountants who can assist your partnership business with all your tax, accountancy and business growth needs.
Once you have found the perfect partner, and drawn up a partnership agreement, the next step is to find an accounting partner who understand your business model.
Our partnership accounting solutions are tailored to help business owners create a detailed plan for improving profitability, cashflow and tax savings, as a result, improving your personal income and wealth. Our bespoke value based competitive fixed fee is tailored as per your personalised circumstances.
At Heighten, we believe in partnership – we will work together with you to ease some of your vital partnership accounting, tax and compliance duties. Our expert accounting team can help your Partnership business with:
- Business accounts
- Partnership tax returns
- Payroll and VAT returns
- Comprehensive tax support
- Finance raising and cashflow assistance
- Minimising your tax bill
- Inheritance tax mitigation
We aim to provide an extraordinary service, and make your partnership business as easy, enjoyable and hassle-free to run as possible.
From my experience with Heighten I…
From my experience with Heighten I would recommend them to family and friends. They are polite, professional and very reliable and get the job done very efficiently.
What is included in our accounting package for partnerships?
As an unincorporated business partnership is a separate entity from its partners, therefore, it’s accounting reporting obligations are also separate to its partners. Furthermore, partners have unlimited personal liability for the business.
It is crucial to appoint an expert accounting firm to deal with your partnership matters who understand how your business works and how the owners share the profits (and losses) generated by the partnership business.
We offer a bespoke accounting solution based on the industry you operate in as a partnership. We also have a team of specialist associates within Heighten family that can help with:
- Complex HMRC investigations
- VAT enquiries
- Mortages and financing
- Pensions and financial advice
- Leasing & factoring
- Wills & legal matters
- And much more
From naming and registering your partnership to calculating your profit share and tax efficient distribution, Heighten Accountants have you covered.
We calculate your value-based fixed fee as per your circumstances and specific accounting requirements for your partnership business.
Our value-based accounting packages for partnership include:
- Award winning Cloud Bookkeeping suite
- Complimentary ‘Manage your receipts from anywhere’ accounting tool
- Dedicated partnership expert accountant
- Financial statements, profit distribution and accounts preparation
- Partnership tax matters, including tax return submissions
- Partnership payroll and auto enrolment management
- VAT returns for your partnership
- Partner self-assessment tax return
- Business and personal tax planning reviews
- Advice on choosing partnership accounting period and when to incorporate
- Regular business advisory and tax saving meeting
- Unlimited telephone and email support ·
Other things we will do to help you build a more profitable Partnership business:
- Growth meetings
- TaxAbility reports
- Wealth SustainAbility reviews
- Accounting system checks
- Finance options arrangements
- Exit planning
Far above and beyond the call of duty.
I have been using their Services for a few years now and I simply could not ask for more from them. From the outset Nadeem Iqbal has taken a personal intrest in my financial affairs and sees me as a friend as I do him. Nothing has been too much trouble. I would recomend them to ANYONE. Their service is without doubt first class
How our partnership accounting service works?
Our partnership accounting package is designed specifically for small and medium size businesses and it works in very simple 3 steps, you:
- Book a free consultation to discuss your partnership accounting needs
- Accept a custom-tailored and personalised value based fixed fee plan
- Achieve your desired entrepreneurial happiness and financial freedom
Hassle free Switching – Changing over to us couldn’t be easier. Our FREE ‘Switching Made Easy’ service will help you to sort out all the paperwork quickly and easily – guaranteed
Our partnership expert accountants and tax advisors have specialist skills in advising small and mid-sized businesses. Our accounting tools such as ‘Heighten Tax Planner’ assist you to make sure you always set aside enough money to meet your eventual tax bills and complimentary annual ‘TaxAbility Checklist’ helps you to cut your personal and business tax bills down to size.
Onboarding with Heighten Accountants
Your journey with Heighten Accountants starts with ‘getting to know you meeting. Our dedicated team of expert accountants will carefully listen to your partnership accounting needs and will tailor a bespoke solution for your partnership accounts, payroll, VAT, Tax minimisation and profitability review and other HMRC obligations. Our value based fixed fee plan ensures that you pay the right fee only for the services you need.
Over 20 Years’ Experience
We’ve been supporting sole traders like you for over 2 decades and have unparalleled experience and expertise. We invite anyone operating as a sole trader to get a non-obligation competitive quote from us today. It’s quick and easy!
By trusting the Heighten team your partnership business accounting will become seamlessly effortless and hassle-free. We aspire to keep your admin to a minimum and assist you to make your business a happily successful and self-managing entity.
Heighten are the Best Property Accountants
We joined the firm 9 years ago since then they have been doing rental income tax return for our jointly owned property. We found them very knowledgeable and skilful. We have always been benefited by their tax saving tips and advice. We are happy with the service and recommend them without any hesitation.
Types of partnership in UK
The definition of ‘partner’ has been expanded from individual to other legal entities such as companies or trustees since The Partnership Act 1890 was introduced. There are four types of partnership in the UK as follow and partners may thus belong to one of these partnerships:
This is the most common partnership in the UK established under Partnership Act 1890. Unlike a company, general partnership is not a separate legal entity. These are an association of individuals and sometimes one or more companies as well.
All partners have unlimited liability. In addition, each partner works as an agent for the other partners and this automatically binds the other partners as they carry out the normal business of the partnership.
A Scottish partnership is similar to a general partnership, but it is treated as a legal person, which means that the partnership can enter into contracts and hold property in its own name.
One or more general partners and one or more limited partners form a Limited Partnership (Limited Partnerships Act 1907). The limited partners limit their liabilities to a pre-determined sum but they cannot take part in the business management and they also do not reserve the rights to bind the business or firm.
Limited Partnership is not a popular form of partnership except in certain specialised areas such as Venture Capital Investment
Limited Liabilities Partnership (LLP)
LLP came in effect from 6 April 2001. Partners limit their liabilities up to their capital contribution but they all can take part in the day-to-day management of the business. LLPs, therefore, combine the flexibility of partnerships with the benefit of limited liability for their members.
Similar to a limited company, LLPs are regarded as corporate bodies and are required to be registered at Companies House. LLPs are a separate legal entity, separate from their members and require Audited Accounts for filing purposes.
Accounting advice for Partnerships
- Partnerships are known as ‘tax transparent’. This means that the partnership is not itself liable to tax, however, the partners are as per their agreed profit shares. A general partnership does not have its own legal entity; the partners are self-employed in their own rights.
In order to work out the partners’ profit share, partnership accounts and profit and loss are prepared first. The UK resident tax laws apply while calculating these profits.
- There is a special treatment for payments to partners though. A careful consideration is required while allocating the profit to avoid anti-avoidance legislation about excessive share or loss. A reallocation of profit may be required under certain circumstance.
- Efficient record keeping is another important function of your partnership business you should not undermine. Although it is not a legal requirement, it is best to open a business bank account for the partnership as it will help you keep your record accurate. Sourcing business loans could be quicker with organised cloud bookkeeping.
- Partnership tax returns are filed with HMRC. The nominated partner must complete the Partnership Tax Return. There is no income tax due on the partnership. However, the partners declare their share on their personal tax returns. The tax year runs from 6th April to 5th April, and online tax returns must be submitted by 31st January to avoid a late filing penalty and surcharges for late payments.
- Business partnerships can be a great way to get your small business up and running faster. However, it is crucial to choose the best business structure when you set up a new business. Other business structures include; sole trader, limited company and a limited liability partnership.
Schedule a call to discuss any aspect of your partnership business and find out how can we assist you growing your partnership business while working as much – or as little – as you want.
Partnership Accounting Service FAQs
Partnership is controlled by the terms agreed by the partners in a partnership agreement. A written or a formal partnership agreement is not mandatory, however it is a good practice to have one as it can reduce the possibility of expensive and hostile disputes in the future. While setting up a partnership, you may consider your agreement covers the followings:
The term ‘salaries’ is a misleading description, when it comes to partnership accounting. The salaries of employees are generally business allowed expenses, thus reduce the profit for the year.
However, as partners are the owners of the business, any amounts that are paid to them under the partnership agreement are part of their share of the profit. Even though the amount is guaranteed, there is an accounting adjustment before the residual profit is shared.
A capital account is the amount invested by the partner while a current account balance on financial statements shows the amount they have earned through the trading activities of the partnership.
A partner’s total capital is the sum of the balances of capital account and the current account. It is appropriate to separate the capital account from the current account. The capital account is usually fixed, while the current account is the current total of appropriations and the share of residual profit/loss, less drawings.
Please note, a loan is not part of the partner’s capital, the loan is treated in the same way as a loan from a third party. However, the interest on the loan is an allowable business expense.
When a new partner is admitted to the partnership, the new partners effectively buy the assets of the old partnership from the old partners. The admission of a new partner will also mean that the profit/loss sharing ratio will change.
If the new partner is bringing assets to the partnership, the new partnership will define the value of these assets as determined by the other partners. Then, the new partner will receive compensation in their capital account for the value of the assets. New partners can also purchase interest from existing partners.
In general, removing a partner is the opposite of adding a partner. There could be three main arrangements when a partner decides to leave:
It is not mandatory to have a name for your partnership as you can trade under your own names. You can choose another name for your business such as trading name, however, you do not need to register your name.
However, on all official documents such as invoices and letters, you are required to include all the partners’ names and the business name, if any.
Your business partnership names must not include ‘limited’, ‘Ltd’, ‘limited liability partnership, ‘LLP’, ‘public limited company’ or ‘plc’, cannot be offensive or the same as an existing trade mark or contain a ‘sensitive’ word or expression, or suggest a connection with government or local authorities, unless you get permission.
If you want to stop people from using your business name, you must register your name as a trade mark.
As a nominated partner you are responsible to register your partnership for Self-Assessment with HMRC. This also means you are responsible for sending the partnership tax return annually. You must register by 5 October in your business’s second tax year to avoid HMRC late registration penalties.
Each partner needs to register separately to send their own tax returns as individuals and declare the share of their profit or loss.
If you have any difficulty in registering online, you may register the partnership using form SA400 or form SA401 as a partner.
If your VAT taxable turnover is more than VAT Registration threshold, you are required to register for VAT. You can also choose a voluntary registration if you are below the threshold to reclaim VAT on business supplies.
You must also register your partnership business, regardless of VAT taxable turnover threshold if all of the following are true:
You can make an online application by registering with HMRC VAT form or you can appoint an accountant to register and submit your VAT Returns and deal with HMRC on your behalf.
When you cannot register online, you can use form VAT1 for postal registration. There are different forms for an EU business ‘distance selling’ to Northern Ireland, import (‘acquire’) goods into Northern Ireland or disposing of assets and you have claimed Directive refunds on them.
When you receive your partnership VAT number from HMRC, you can also sign up for a VAT online account.
Make sure time is taken to draft a partnership agreement to avoid future problems. Heighten Accountants can provide you with advice regarding all tax aspects of becoming a partnership.