Partnership splits - confused!

bizgirl

Hi everyone,

I'm confused over how to split the ownership of a partnership. Myself and my husband set up a partnership together several years ago and in the beginning we were both putting in equal (roughly) amounts of work.

Now circumstances have changed - he has another job and I'm doing the vast majority of the work for the partnership (although he does still help out sometimes). As a result I now take all the drawings from the partnership as my income and he takes zero.

My question is this: if one person is taking all the drawings for themselves are you still allowed to call the business a partnership or do you need to re-register as a sole trader? I'd like him to continue to be a partner if possible as like I said, he does help out sometimes.

I'm also hoping to apply for a mortgage soon and the bank has said that if the partnership is split 50/50, they will only consider my income to be 50% of the partnership and the rest will be allocated to my husband.

This seems wrong as it's me who is taking all the income (and if I can only allocate 50% of the profit to myself, my earnings will look pretty minuscule). Can I therefore change the partnership split to something like 95/5 in my favour - and if so, how do I go about it?

Any advice would be hugely appreciated!

Savvy_Sue

What does your original partnership agreement say? You know, the one you drew up originally to say how everything was to be split, what you'd do if you wanted to change it etc.

Also, does it matter if only 50% of the income is assigned to you, presumably the other half will go to your OH so his income will be higher than yours to compensate?

[Deleted User]

bizgirl wrote: »

Hi everyone,

Can I therefore change the partnership split to something like 95/5 in my favour - and if so, how do I go about it?

Any advice would be hugely appreciated!

Yes you can - or even 100% - 0% if you wish.

What you do need to understand is the difference between profits and drawings. For the taxman drawings are irrelevant. They are more concerned with what the partnership makes (profits) not what is taken out of the partnership (drawings)