Self Employed Tax

tadsa

When completing our SOA, my OH and I (we are in a self employed partnership) need to fill in our net income. Business has been going down the pan lately (hence BR) but we obviously bill people with VAT added and our income includes this VAT and also any tax that we should be putting aside. How do I fill in Net income?

Thanks in advance!

sandiep

Your net income is your PROFIT from the business, not the businesses income. So you need to do accounts, take off the VAT (which you need to account for as a liability), and deduct all relevant expenses etc.

If your business is going down the pan, you're probably making tax losses, so recommend doing this ASAP so that you can avoid any tax bills building up re the July Payment on Account, and also, you may be able to reclaim some tax against any tax on profits that you paid last year.

debt_doctor

Hi,

If all business partners are insolvent you could use form 16 under the insolvent partnerships order 1994. These are available from the court or the insolvency service.

Because a partnership is a single legal entity this form requires only one fee and deposit, no matter how many partners there are.

DD

maxmycardagain

each partner in a sole tradership needs to be registered with HMRC as such and each are liable for ALL (not half each) of any tax liability....

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

A partnership has no legal status, as a Limited Company would, it is merely a vehicle linking two or more self-employed people in a simple business structure.
Essentially, each of the partner’s business income is counted alongside their existing personal income, so the accounting side of your business will be very straightforward. As the name suggests, partners are personally liable for any debts incurred in the running of your business which wouldn’t be the case under the Limited Company route.
You will not need to notify Companies House, nor deal with any administrative or accounting requirements which are required of Limited Companies. Each partner will need to inform HMRC that they are now self employed.
In terms of accounting, you will need to submit an annual self assessment form to HMRC and keep accurate and up-to-date records of all business transactions and accounts. The partnership itself will also have to submit an annual self assessment form as well as each partner. You will also be pay income tax on all profits and pay national insurance contributions on those profits.
It is worth bearing in mind that if either of the partners withdraws from the business (if they die, resign or go bankrupt), the partnership must be dissolved instantly, since it has no legal status.

brovahelpa

mmc. I found your last post very interesting, especially the last sentence. In the event of a partner resigning from their partnership, how does the remaining partner go about dissoving the partnership? Is it only in these circumstances that the partnership has no legal standing.