Expert accounting for the perfect partnership

A limited liability partnership is a business structure whereby the business partners have limited liability in the company. For example, the amount of Partner 1’s investment is £100k. Therefore, her liabilities are limited to this amount only. This is an attractive way to do business as you will not be liable for funds above the amount of your investment into the company. All of the partners in an LLP have the rights to partake in the day to running of the business, and if the partners change, the business can carry on as usual. 

Strictly speaking, your partnership is not taxed at all. It is the partners who are taxed individually and the partners who decide how to split company profits. The usual income tax brackets apply as they do for employees and self-employed people. For example, if you make a £50,000 profit in one year, and divide into 2 partners your annual income for that year is £25,000. You would be taxed 20% on your income. Don’t forget it’s a legal requirement that the partners submit a self-assessment.

These forms are submitted to HMRC with your self-assessment tax return. The SA104s is a short version of your company’s income if it is below £85,000 and the SA104F is the longer version if your company’s income is above £85,000 or if your company’s finances are less straightforward.