Partnership advice

[tubbyandtattooed]

Hello everybody, Im hoping you will be able to shed a little light on this for me.

My partner is currently self employed and running a business, we are thinking of expanding her business slightly and pulling me in to help. I understand we will need to set up as a partnership its just the fact we will have 2 separate business's running, will this mean 2 partnerships?

Business A - Hand Crafted Jewelry sales
Business B - Wholesale Craft Supplies

We would like to avoid Business A been too linked to Business B as the wholesale business will sell the parts needed to make the jewelry and as a result would affect the main business.

Or would we set up a partnership called Business A and then have -
Business A T/A Name 1
Business A T/A Name 2

Sorry if this is confusing but the person i spoke to is the Inland Revenue tonight could not help and asked me to call back after the 31st and ask for a technical adviser lol

 

[ChrisKG]

There wouldn't be any problem setting up two partnerships - one for Business A and one for Business B. You'd need to inform HMRC that you've set up two separate partnerships.

At the end of the tax year, you'll be sent a notice to login and complete two partnership tax returns (one for each business) as well as a self assessment form for both yourself and your partner. So that's four forms in total! Bear in mind that you should keep the accounts for both businesses seperate as this will help fill in the partnership tax return forms for each business.

If Business A is buying from Business B, i guess the money will all be going into the same pot, but you'll have to record every transaction to calculate the exact income and expenses for each business.

Hope that helps. I'd check everything with HMRC if I were you though.

Chris

 

[tubbyandtattooed]

Hi thanks for the reply

That is what I thought too but the 2 people I spoke too at HMRC did not seem to know lol

I thought the same about the money all going in to one pot so I think I would open 2 bank accounts (one for each business) they will not be turning over huge numbers at 1st so I guess paper work will not be too hard

Cheers for the help.

 

[Paul_Rosser]

You may want to consider looking at an LLP (Limited Liability Partnership), as with a normal partnership you don't have the same limited liability against company debts, that you would with a limited company.

 

[tubbyandtattooed]

Hi Paul thanks fot the advice. Is there a lot more red tape involved in the LLP? I don't expect to mount up huge debts as I curently work full time and all the set up costs are currently coming out of my pocket.

I'm trying to avoid any loans or credit.

Cheers

 

[Paul_Rosser]

There is I believe, one of the companies I worked for went LLP and it took a long time, so guessing there is a lot of paperwork.

Provided you won't be getting credit, have the proper insurance and always pay your VAT/CT then shouldn't be a problem.

 

[tubbyandtattooed]

Thanks for the advice I will look deeper in to the LLP option tonight as I'd like to cove all options 100% but as it will only be 2 small business's that don't turn over lots LLP paperwork might just snow me under lol

The only reason we are setting up 2 is that bussiness A will need to buy large amount of parts to get the best rates, so I thought if business B bought this we could sell the parts elsewere and bussiness A could get a cheeper deal lol