sole trader adding partner

five2eight

Hi

My wife has recently changed jobs and is looking to go self employed. I am already self employed. I will be doing all of the paperwork for my wife, both working from home, so it it easier and more tax efficient to make my wife a partner in my business or to have two seperate sole traders?

We will be earning around 80 -90k per year. I also have to consider V.A.T!!

528

Horace

Do you and your wife work in the same type of business? If so then it is probably worth looking at a partnership (speak to your solicitor and accountant) re VAT get in contact with the HMRC as you can register for VAT with them. If it were me I would be speaking to my solicitor anyway as it may be better still to register as a limited company.

five2eight

If we were both self employed, we individually would not reach the £68k threshold. Isn't it better not to be V.A.T registered. I could recoup the V.A.T i am paying in my prices but my clients not having to pay 17.5% will be a big advantage.

or am i missing something?

528

paulwf

five2eight wrote: »

If we were both self employed, we individually would not reach the £68k threshold. Isn't it better not to be V.A.T registered. I could recoup the V.A.T i am paying in my prices but my clients not having to pay 17.5% will be a big advantage.

or am i missing something?

528

If your business is mainly B2B then if your clients are VAT registered they won't care if you charge VAT or not. In fact it will give you much more prestige as you will be seen as a business with a reasonable turnover.

If you are VAT registered then you will also be able to claim back VAT on all your purchases. Which is why companies that are mainly B2B may choose to be VAT registered even if they are well under the threshold.

FatAndy

My understading is that if your businesses are both effectively one and the same you have to register for VAT as a partnership whether you like it or not. I used to work for an accountant and we had a husband and wife partnership on our books who owned two small hotels which were right next door to each other. They ran both as seperate businesses to keep below the VAT threshold but then the VAT man found out and they were made to register as a single business.

five2eight

Do statutory service providerd i.e councils, police, social services, NHS claim back the V.A.T they pay?

borders_dude

five2eight wrote: »

Do statutory service providerd i.e councils, police, social services, NHS claim back the V.A.T they pay?

Are social services a seperate organisation?

In Scotland social work is part of the Council!