If you are in business as a sole trader you are personally responsible for your business activities. You may take all the profits made by the business, but at the same time you are responsible for all its debts and liabilities.
You are taxed on your total personal income, from your business Accounts and any other source which is disclosed on your personal tax return which we can prepare for you and submit long before the 31 January deadline.
As soon as you become self-employed, you need to complete and submit within three months Inland Revenue form CWF1 to avoid incurring a penalty. A copy of this form can be downloaded from www.inlandrevenue.gov.uk/forms/cwf1.pdf
The partnership is the main non-corporate vehicle by which individuals conduct business on a joint basis. Individual partners are taxed on their income from the partnership as if they were self-employed.
A partnership does not actually exist as a legal entity in its own right: technically it is an amalgamation of individuals and when it conducts business it does so through its individual partners not as a collective entity. Each partner acts as an agent for the others and this means in effect that each partner is bound by the actions of those other partners. Partners are also jointly and separately liable for their firms’ debts. The partnership is a very private, flexible format which allows firms to decide how to organise internal management and profit sharing and is widespread among businesses of all kinds.