What is the Partnership?
A partnership is a form of business where two or more people share ownership, as well as the responsibility for managing the company and the income or losses the business generates. That income is paid to partners, who then claim it on their personal tax returns – the business is not taxed separately, as corporations are, on its profits or losses.
Whether you are venturing into a new partnership or are already established, VTAX Accountants have dedicated accountants who can assist your partnership business with all your tax and accountancy needs.
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Pros
There are several advantages of choosing to structure a business as a partnership, which include:
- Fairly easy to set up and maintain over time
- Partners can pool their resources to fund the company’s start-up
- Partners can share the workload and the rewards of the business’s success
- Being able to offer key employees the potential to one day become a partner in the business can be a big carrot that encourages them to stay long-term
Cons
Of course, where there are advantages, there are also disadvantages to forming a partnership:
- Where more than one owner exists, there are bound to be differences of opinion that could threaten the business.
- Although partners split any profits the business generates, if the payout is not in sync with each partner’s contribution to the company, disagreements can erupt.
- Unlike corporations, which help to shield owners from liability, partnerships have both joint and individual liability. That is, all partners are liable for their own actions on behalf of the company as well as the actions of the other partners.
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VTAX Accountants and Tax Advisors can provide you with advice regarding all tax aspects of becoming a partnership or discuss the advantages of trading as a Partnership. We love to help independent business owners thrive, so please do give us a call on 0800 0523 555 to book a free consultation with us.