If you are going into business with a partner or partners and are setting up a partnership, you must choose a ‘nominated partner’ who is responsible for managing the partnership tax returns and business records.
To set-up as a partnership, you should take the following steps:
- Choose a business name
- You do not need to register your chosen business name
- You must include all the partner’s names and the business name on all official paperwork
- Business names should not include ‘Limited,’ ‘Ltd,’ ‘limited liability partnership,’ ‘LLP,’ ‘public limited company’ or ‘plc’
- Your chosen business name should not be the same as an existing trademark
- Choose a nominated partner who will be responsible for managing the partnership tax return and business records
- Register the partnership with HM Revenue and Customs (HMRC)
The nominated partner must register your partnership and themselves for Self-Assessment with HMRC (https://www.gov.uk/set-up-business-partnership/register-partnership-with-hmrc) by the 5 October within your business’ second tax year. For example, if you have started your business anytime during the 2017/2018 tax year, you must register the business with HMRC by 5 October 2018.
Other partners of the business must register separately, usually after the partnership has been registered, and submit their own tax return as they are classified as self-employed (link to how to set up as a sole trader).
- Register for VAT
Despite registering the partnership, you will not automatically be registered for Value Added Tax (VAT).
You will have to register for VAT if the businesses turnover reaches, or is expected to reach the current VAT registration threshold of £85,000 (from 1st April 2017), during any 12-month period.
See also: How to register your business for VAT
When you register for VAT you will need to charge VAT to all your customers, and you will also be able to claim back the VAT you have paid for work-related costs.