What records does a partnership need to keep?
As a partnership, you must keep a record of the partnership's sales and takings and the partnership's purchases and expenses.
The nominated partner will use these records to work out:
• the partnership's business profit; and
• each partner's share of the profits - this goes on the partnership pages that you and your partners fill in with your own tax returns.
Whilst there is no express legal requirement for a partnership to prepare accounts, they will be required for taxation purposes and so partnership agreements should provide for a balance sheet and profit and loss account to be drawn up for each accounting year. You must also keep records so that you can fill in your tax returns fully and accurately. You may have to pay a penalty if you don't keep records or if you don't keep your records for long enough. In fact the Partnership Act 1890 does refer to partnership books being kept and does require partners to render true accounts and full information in matters affecting the partnership to any partner. (Note certain “qualifying partnerships” are now required to prepare accounts within the requirements of the Companies Act 2006, however this broadly refers only to partnerships where each partner is a limited company).
Records you may need:
Different businesses need different types of records. Depending on the type of business, the records you may need to keep might include:
• payroll records;
• invoices and receipts;
• rent books;
• electronic sales records or till rolls;
• details of anything taken out of the business for personal use; and
• an inventory of stock on hand.
You’ll also need to choose a ‘nominated partner’ - the partner responsible for managing the partnership’s tax returns and keeping business records.
The nominated partner must register the partnership and themselves for Self-Assessment. The other partners register separately; they usually do this after the partnership is registered.
You can register for Self-Assessment with HMRC. Please see HMRC’s website for more details.