Partnership, but as two sole traders?

buglawton

Each sole trader will get a £3000-ish tax free allowance and lower tax rate for the first few £1000's of profit. I have noticed one market trader couple who both place separate orders with us for this reason - they wanted to present two separate sole trader businesses to the tax man. Perhaps one of them does series A of stalls, the other series B. A partnership whereby each sole trader takes a pay cheque from a cosolodated business will create a much more complcated tax return. Also, once turnover for an individual sole trader passes £15,000 there are more forms to fill.

2 sole trader tax returns where each return is linked with one individual is the simplest and IMHO most economical way to go (though if one of the indiviuals has a separate income they would not get that £3000 tax allowance).

martindow

Buglawton - that doesn't reconcile with my experience. I think maybe what you are saying is a tax dodge when the two people have formed a company and there is some advantage to having some transactions coming from an individual as a sole trader rather than the company to avoid tax.

I am half of a partnership. I fill in the partnership tax return but no tax is paid by the partnership itself. The figures from that return are transferred to our returns and then we pay our own tax as individuals. Each of us has the usual personal allowance.

buglawton

OK, I was not aware that a partnership arrangement is as simple as sole trader status for tax form-filling purposes. A quick Google turned up http://www.bcentral.co.uk/business-information/starting-up/forming-a-company/what-company-structure-sole-trader-partnership.mspx which sums up the differences / pros & cons.