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A partnership is a relatively simple way to start a new business with two or more partners. The partners could be individuals, other partnerships, or limited companies, but all must register with HMRC.

The process for registering an individual person as a partner is a bit different to registering a partner which is an entity, like another partnership or a company.

Register a partner in a partnership who is not an individual online or using form SA402

 
An individual partner registers with form SA401.

Who need to complete form SA402?

The form should be filled in and submitted by the nominated person in the partnership which will be a partner in the other partnership. And yes, we understand if you need to read that sentence a few times! Remember to include the registration number on the form if the new partner is a limited liability partnership or limited company.

 

accounting services for partnerships

Can a limited company be a partner in a partnership?

Yes, a limited company can be a partner in a partnership. The company may earn income from its portion of the partnership, and will need to include this when calculating the company’s profits on its Company Tax Return.

Tax returns and partnerships

In a partnership:

The main partnership tax return must also detail the share of profits or losses for each partner, using the partnership statement. A copy of the partnership statement should be made available to each partner so they can complete their own tax return.

What if I leave a partnership, or the partnership ends?

A partner who leaves a partnership still needs to submit a tax return for that year, up until the date they left. If the partnership itself ends, the tax return is completed for the period of trading up until the date the partnership ended.

Record keeping in business partnerships

You must retain partnership records for five years following the 31st January deadline of the partnership tax return. This also applies if you complete a paper tax return.

The records which you must keep depend on the type of gains and income the partnership receives. Unfortunately, failure to maintain the correct business records could result in a penalty or fine, so always double check!

Talk to one of the team to learn more about our online accountant services. Call 020 3355 4047, or use the live chat button on screen. 

About The Author

Elizabeth Hughes

A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.

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