2 sole traders working together?

[Mrs T]

Hello,

I wonder if someone would kindly help me out with some advice.

I phoned the government Business Link asking for advice about Partnerships. I was told that you do not have to register as a partnership and 2 sole traders can work together in the same business if they wish and share the profits.

Anyway, my main question is about entering income and expenses for tax purposes, the lady at Business Link said she thought that we could simply split everything 50/50 and enter it into our own tax return.

I know I should speak to the tax office about this but just thought that someone here might be able to give me some guidance, before I phone them.

We are a husband and wife team so don't feel the need to make any legal/partnership agreement.

Thanks for any help

 

[elaine@cheapaccounting]

If you are working in the same business and splitting the profit then it is a partnership.

You register as a partnership, do a partnership self assessment but individual self assessments.

See here for details:

http://www.hmrc.gov.uk/sa/self-emp-part.htm

 

[Zeno]

Yep, that sounds like something Business Link would say. As you are planning to talk to HMRC next you should be sure to consult the man in the pub for the full hat trick of dubious advice.

Coming on here is the first step in the right direction you have taken.

 

[Mrs T]

Thank you for your reply Elaine.

That was my first thoughts and was the reason for phoning the Business Link because I'd been reading about Partnerships but even after explaining that we would be working in the same business, she definitely said that we did not have to register as a partnership if we did not want to.

Thanks for your help

 

[Mrs T]

Yep, that sounds like something Business Link would say. As you are planning to talk to HMRC next you should be sure to consult the man in the pub for the full hat trick of dubious advice.

Coming on here is the first step in the right direction you have taken.

oh dear, surely not a government body that gives the wrong advice?

I think I will certainly make this site my first port of call in the future.

 

[Mrs T]

Another quick question please....

if you have more than one self-employed business, could a partnership cover them all or do you have to create a seperate partnership for each one?

 

[Zeno]

Another quick question please....

if you have more than one self-employed business, could a partnership cover them all or do you have to create a seperate partnership for each one?

It depends. Where are you in the UK (Things are slightly different in Scotland)?

Also, by more than one self employed business do you actually mean truly seperate businesses - e.g a coffee shop & plumber or one business with different income streams - a clothes shop with retail & online sales?

 

[elaine@cheapaccounting]

Also bear in mind reaching the vat threshold which could mean vat needs to be charged on income from all businesses.

Depending on circs you might want to discuss the structure of the businesses with an accountant up front.

 

[Mrs T]

It depends. Where are you in the UK (Things are slightly different in Scotland)?

Also, by more than one self employed business do you actually mean truly seperate businesses - e.g a coffee shop & plumber or one business with different income streams - a clothes shop with retail & online sales?

We are in England.

Yes they are two totally separate businesses. I ran them both on my own for some time but we are now both working full time on them so think that we should be looking at the option to share profit which would also reduce taxable income for me, but don't want to do anything wrong or have it look like we are trying to evade any tax payments.

 

[Zeno]

We are in England.

Yes they are two totally separate businesses. I ran them both on my own for some time but we are now both working full time on them so think that we should be looking at the option to share profit which would also reduce taxable income for me, but don't want to do anything wrong or have it look like we are trying to evade any tax payments.

Really is a case for you accountant to give you the best advice here. It could be complicated.

 

[Mrs T]

Also bear in mind reaching the vat threshold which could mean vat needs to be charged on income from all businesses.

Depending on circs you might want to discuss the structure of the businesses with an accountant up front.

We are very small time at the moment, each business makes less than £8,000 gross

 

[Mrs T]

Really is a case for you accountant to give you the best advice here. It could be complicated.

Yes I think that looks like our best option. Thank you both for your excellent advice.