Partnership with Assistant?

[Twinkle-Toes]

Hiya folks,

I am gonna ring the Tax Office and talk this through with them BUT...

I have registered my hubby as assistant and it looks likely he won't be working anywhere else now. So as far as tax goes would a partnership work best?

So I can pay him X amount and I take the rest as to take advantage of his tax allowance?

Thanks in advance

p.s - You'd never think I used to work for the Tax office :blush:

[MrAnchovy]

Yes a partnership is probably best which means you will both have tax allowances and Class 4 NI thresholds to offset.

That doesn't mean you pay him a salary though - then he would be an employee. Instead he gets a share of the profits - which can be a fixed sum so has the same effect.

[Twinkle-Toes]

Thankyou muchly :thumbsup:

[Penny1959]

Hi Kate

This is what I have done with my daughter - we both take money out of the account as 'wages' and both pay own NI and tax bill (if any)

One thing I would recommend - to save problems later if want to (need to) end partnership - is to record % share of business.

With my daughter I have 70% as my house, I set it up, all resources were in place before she started.

She brought in her teaching degree

We will be ending the partnership soon - she will leave with her degree and I will keep name, resources, good will etc.

A bit messy with tax side as part way through year - but that can be sorted

Penny :)

[Twinkle-Toes]

Ah good idea there Penny.....as it's my hubby should I just do 50/50 do you think?

Or exert my power and only give him 30% lol Oooooh it's gonna go to my head!!

[Penny1959]

As it is your DH - guessing money will end up in same place - so won't matter - but would if ever you decided to go seperate ways or even if DH decided to get another job.

50 /50 will help with tax as both can use own tax allowances - however I am not a tax expert - hopefully someone will come along to give a more professional answer

Penny :)

[MrAnchovy]

Business Link (http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073864308) has some information about partnerships, and HMRC (http://www.hmrc.gov.uk/sa/parts-partners.htm) has more detail on the tax procedures.

Is distribution of assets on ending the partnership a big issue for you - I wouldn't have thought most childminding business have a lot of assets? Unless you are planning to value and make a payment to the retiring partner for goodwill? And if you don't make any other arrangement, the Partnership Act 1890 says any remaining assets should be split in the same ratio as the profits anyway.

[Helcatt]

I was wondering this too. My dh has recently become my assistant and will leave his job soon - as soon as we have some people sign up for the extra spaces, in fact.

I was going to have a chat with an accountant to ask the best way about it, I've done the accounts myself the last couple of years as income fairly small so not tricky but need advice now, me thinks.......