Self employed or partnership
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Jessicasmum
Posts: 2 Newbie
Hi my partner is about to go self employed. He will be doing property maintenance jobs with his step dad. His step dad will be paying for near enough everything they need to start up. My question is does my partner need to register as a sole trader or do they need to register as a partnership? I think I know the answer but just wanted it confirming. They will be doing 90% of the jobs together but sometimes they might do a few on their own. If they have to be a partnership, how does my partner record how much he earnt for each job?
Thanx
Anna
Thanx
Anna
0
Comments
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does your "partner" intend to take a share of the income earned by him and his step dad?
if yes, then surely you do not need to ask is this a PARTNERSHIP since the profits will be split according to whatever share the 2 partners have agreed upon
note carefully: a partnership must file a set of accounts and a tax return for the partnership. Each individual partner must also file a tax return for their respective share of the partnership income, expenses & profits0 -
My partner will be giving his step dad an invoice for how much he wants paying for doing the jobs with him. My partner will also be doing work by himself too so won't just be doing work for his step dad.
They will be doing lots of work together but my partner will be invoicing his step dad after his step dad has arranged a price with the customer.
This is allowed isn't it?
Anna0 -
If they are both going self employed his step dad would need to operate CIS and deduct tax from your partner.0
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Warning:
If they are a partnership then both will be jointly liable for all debts incurred by the partnership and the income will be split between them 50:50 by default.
If they want to form a partnership they should see a solicitor and get a partnership agreement drawn up.
If stepdad is dealing with and invoicing the customer, and subcontracting the work to your partner, and the customer doesn't pay, is stepdad still going to pay your partner?
It sounds like your partner and stepdad may be better forming a limited company; the initial capital for tools and materials etc can be accounted as share ownership in the company or as a loan to the company. Jobs are booked and paid for through the company and each takes a wage from the company in proportion to the client hours billed. Again, you should get a solicitor to draw up the relevant Articles of Association for you.A kind word lasts a minute, a skelped erse is sair for a day.0 -
Owain_Moneysaver wrote: »and the income will be split between them 50:50 by default.
Not correct. The partners agree between them how to split the income/profits. In the absence of any agreement, then the default would be 50-50, but I'm sure anyone going into partnership would have discussed/agreed profit sharing. If one partner does more work than the other, then they can take a bigger profit share.0 -
that is not a partnership then is it.Jessicasmum wrote: »My partner will be giving his step dad an invoice for how much he wants paying for doing the jobs with him. My partner will also be doing work by himself too so won't just be doing work for his step dad.
They will be doing lots of work together but my partner will be invoicing his step dad after his step dad has arranged a price with the customer.
This is allowed isn't it?
Anna
that is master and servant, or, as your step Dad seems to be hoping, contractor and sub-contractor and thus the CIS implications already mentioned
what other work your partner does, and for who, is totally irrelevant in respect of the taxation relationship between your partner and step dad0 -
Given all the responses above, you may be moving to a completely different agreement anyway, but whatever you're doing, your partner and his step dad really need to thrash out the issue of payments well in advance. You have perhaps given it more thought than is suggested here, but whatever the relationship is going to be, agreeing on the payment split BEFORE starting is so important.Jessicasmum wrote: »My partner will be giving his step dad an invoice for how much he wants paying for doing the jobs with him. My partner will also be doing work by himself too so won't just be doing work for his step dad.
They will be doing lots of work together but my partner will be invoicing his step dad after his step dad has arranged a price with the customer.
For example, if your partner has some skills that his stepdad lacks, then it may be that he completes more of that job. If your stepdad is more experience all round, and especially if your partner is learning on the job, then it's probably entirely appropriate for your partner to receive less than 50% of each job.
And the reason for suggesting a FORMAL agreement, drawn up with a solicitor, is that if it all goes horribly wrong you've got something to fall back on. For example, either your partner or stepdad are unwell: how do you split the job then? One or other of them has a domestic emergency, or wants a holiday, ditto. Your partner gets offered a solo job but stepdad wants his help with another one, who wins?
And so on.Signature removed for peace of mind0
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