How do business finances work? Can you have a wage?

[CookieCrumble14]

Hey

I have done some research and can't seem to find an answer.
If your in a partnership and each month you pay your employees and after you have set aside the taxes due on that monthly turnover, you and your partner have a 50% share of what is left in the business

My question is does each partner literately take their 50% from the main account each month and can spend it as they wish to (i.e a wage or if the choose to save)

 

[Scalloway]

If you are a sole trader or a partner in a partnership you and the business are the same thing. Any partner can choose what they do with funds in the business. They would be advised to keep money aside for their tax bill.

 

[ed@easyaccountancy]

The tax payable at the end of the year will be due on the profit from the partnership rather than the turnover. Assuming, there is an agreement to split the profits 50:50, then yes, you are free to take that amount from the bank account should you wish. It is not a wage, but an appropriation of profit and does not count as a expense of the business.

However, remember that you will need to leave enough working capital to pay your suppliers etc and enough to pay your tax bill once that becomes due.

 

[Simply Clicks]

Agree with Scalloway. You and the business are essentially the same legal entity. If you like the partnership model, and you have employees other than the partners, I'd check out limited liability partnerships.