2 people starting a side hustle business, simplest way to register?

rread97uk

So feeling abit overwhelmed at all the ways to register our business. 

Both me & my friend work full time & have no plans in the future to leave our jobs, this side hustle plan is just a plan to bring in a few extra quid while enjoying our hobby! 

Everything will be split 50:50, purchases & profit, turnover will be very small to start with, maybe £1000 a month max, forming an official partnership seems abit to complex when it comes to doing 3 self tax assessments & I’m not sure we need to get as involved as registering as a Ltd company yet. 

Surely there must be a simple way we can both run the business & just do one tax return as a business whole? 

Also bank account wise, as it’s on a small scale can we get away with just using a joint personal account? Any recommendations ?

Any advice is much appreciated! 

sgthammer

Self-Assessment is only as complicated as your business itself. Provided you keep adequate records as you go along, which could be as simple as a cashbook, totting things up at the end of the year is the easy bit. 

A simple partnership gives you an entity that can open a bank account. Legally you could use a joint personal account, but it depends on the bank's own rules and most won't allow it. If it's a cash business then technically you could run it out of a biscuit tin, but you'd each still have to declare your share of the profits.

rread97uk

sgthammer said:

Self-Assessment is only as complicated as your business itself. Provided you keep adequate records as you go along, which could be as simple as a cashbook, totting things up at the end of the year is the easy bit. 

A simple partnership gives you an entity that can open a bank account. Legally you could use a joint personal account, but it depends on the bank's own rules and most won't allow it. If it's a cash business then technically you could run it out of a biscuit tin, but you'd each still have to declare your share of the profits.

So is Self assessment & declaring the share of profits a different thing? So for example if profit was £2000 & we took £1000 each its as simple as that? 

Also would we have to set up the partnership? Is that easy to do? & then after this it gives us access to set up a business bank account for us to use? 

tacpot12

I think you have four options;

. Each set up as a sole trader, and collaborate as much as you need to within the restrictions of being two seperate businesses (e.g. You might buy all the materials you both need and sell them to your 'partner' at cost. Your partner might do all the marketing and buy your finished items off you for a price that reflects that they are incurring all the cost of sale). You will each submit your own a Self-Assessment return (IF your trading income is more than £1000) and each would need your own business bank account. This sets you up to part ways as easily as possible and to be able to do work that isn't part of the 'partnership'. 

. Set up as one sole trader with one person employing the other. This opens you up to a world of pain with employment law and payroll for one person, but you would only have one Self-Assessment return to submit, and you would only need one business bank account. 

. Setup as a partnership. I ran a property rental business with my life partner, and found the partnership tax return process relatively straightforward, but that was before Making Tax Digital started to rear it's ugly head. Make sure you have a written partnership agreement. You would only need one business bank account. 

. Setup as a Ltd company. You then have the headaches of needing an accountant, or one of you becoming an accountant (and deserving a greater part of the profits for doing so). You will need to get your head around Corporation Tax returns and Making Tax Digital. You only need one business bank account. 

I think the first option is the most flexible, and I woudl suggest you do this for a couple of years to see how it works out. 

MyRealNameToo

rread97uk said:

sgthammer said:

Self-Assessment is only as complicated as your business itself. Provided you keep adequate records as you go along, which could be as simple as a cashbook, totting things up at the end of the year is the easy bit. 

A simple partnership gives you an entity that can open a bank account. Legally you could use a joint personal account, but it depends on the bank's own rules and most won't allow it. If it's a cash business then technically you could run it out of a biscuit tin, but you'd each still have to declare your share of the profits.

So is Self assessment & declaring the share of profits a different thing? So for example if profit was £2000 & we took £1000 each its as simple as that? 

Also would we have to set up the partnership? Is that easy to do? & then after this it gives us access to set up a business bank account for us to use? 

Thats a partnership which means you need to form one and submit its own return. A partnership is simple to run. 

Your alternative is to run independently of each other but then you can't just share stuff but if your mate buys X you will need to hire it off them because its not a joint asset and it can mean if he's feeling a bit short on cash this month he can keep all the jobs for himself rather than referring some to you so you will be get different revenues and profits from each other. 

rread97uk

MyRealNameToo said:

rread97uk said:

sgthammer said:

Self-Assessment is only as complicated as your business itself. Provided you keep adequate records as you go along, which could be as simple as a cashbook, totting things up at the end of the year is the easy bit. 

A simple partnership gives you an entity that can open a bank account. Legally you could use a joint personal account, but it depends on the bank's own rules and most won't allow it. If it's a cash business then technically you could run it out of a biscuit tin, but you'd each still have to declare your share of the profits.

So is Self assessment & declaring the share of profits a different thing? So for example if profit was £2000 & we took £1000 each its as simple as that? 

Also would we have to set up the partnership? Is that easy to do? & then after this it gives us access to set up a business bank account for us to use? 

Thats a partnership which means you need to form one and submit its own return. A partnership is simple to run. 

Your alternative is to run independently of each other but then you can't just share stuff but if your mate buys X you will need to hire it off them because its not a joint asset and it can mean if he's feeling a bit short on cash this month he can keep all the jobs for himself rather than referring some to you so you will be get different revenues and profits from each other. 

Okay thank you! After doing some more research we’re going to go for the official partnership option, I think once we’re used to it, should be fairly straight forward! Just want to make sure we’re doing it all officially & not miss anything important. 

Savvy_Sue

It is probably worth making a few calls to local accountants, to find out what they'd charge for advice on forming a partnership and then helping you file accounts initially. 

And I'd strongly recommend a 'proper' partnership agreement, setting out the terms, how you share revenue, what to do if one of you wants to leave or is incapacitated for any length of time, how you resolve any disputes over who's done most work etc. You really don't want to wait until you've got a problem to start working out how to resolve it! You may be best mates now, but that can change ...