Say my friend was to partner up with another friend (so in a partnership). One of them will be acting as a sole trader for the business.
How will the taxes work? Ofc this is dependent on the income, but will the amount owed in taxes be stated when the accountant deals with it? Or will person A know this beforehand so that they can inform person B and split the costs?
Also is it correct to state that all receipts invoices etc need to be retained but doesn’t have to be submitted? Would the business have to create invoices for each customer?
If it’s a partnership then won’t both of them want to be listed as owners? Therefore it can’t be a sole trader business
Tax is 20% unless you earn above the threshold mentioned earlier. So if you set aside this percentage from all the money you bring in you will be fine. You can also use software like Xero if you’d like more accurate figures.
Yes. Keep a copy of all invoices and receipts etc for all the money you receive and all the things you purchase for the business. You can then pass these over to your accountant and he will claim as much tax back as he can for you.
Sorry, according to my friend it will be a sole trader business.
He will just split the profit with his friend who does not want to be financially affiliated because of potential implications.
So on each sale made, put aside 20 percent?
For those things that are purchased with cash and a seller does not provide receipt, how will this be rectified? Ie. Inventory paid by cash from private seller.
For the money received, I guess create customer invoices detailing their purchases and the amount?
What are these implications? If you’re splitting the profits with him this will be recorded as an outgoing in your tax return so he will be affiliated. Then he will need to declare these earnings in his tax return too.
HMRC aren’t stupid, they can connect the dots and work out when they’re being scammed from things that are undeclared. So they will come after both the business and the individuals involved.
You can get away with some things to a certain extent but any respectable businesses that are trading between eachother will provide an invoice or receipt of some form.
Is all of this really for a “football club”?
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tbutz
(🏳️🌈 Producer of "low value commentary")
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This has descended into a very dodgy area now. Speak to an accountant. And maybe a lawyer.
I have to clarify that it’s not a dodgy business at all that my friend is thinking of. It’s catering to events in the events industry, but most his suppliers want cash only for whatever reason, which I’m sure now that you’ve clarified, they will have to provide some form of receipts.
But to clarify, on each sale made he should be putting away 20 percent for tax?
I will show him this thread, thank you. I completely agree. He currently has a HSBC current account, and plans to use Starling business. Thanks for the added info peeps.
