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Kimbers99 said:
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is anyone here in a bookkeeping partnership? I am trying to get my head around how we would work our partnership agreement if two of us joined forces - how to calculate salary/profit share fairly according to hours worked. Do we just look at client hours or admin/business hours? Do we pay ourselves salaries based on hours worked then how should remaining profit be shared? impact of calculating taxable profit on SAT return? We've come up with lots of different ideas but would be great to see an example of a working arrangement!
Anything in particular we should consider? Or is there an alternative recommendation? We had been thinking Ltd but in the early years are likely to lose out tax wise with corp tax.
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Personally I’d go down the incorporated route (LLP) as you want as much protection as possible - profit and salary ratios are entirely up to what is deemed fair to each of you - there is no magic formula - one may put in more physical time whilst the other may be more qualified - probably the fairest way to split the profits and divvy up the salaries is on the expected fee earning capacity of each partner, then adjust as the year goes on.
Tax wise if a LLP then partners will be individually taxed so no disadvantage to being incorporated – if a Limited Company as opposed to a Limited L Partnership then there is corporation tax to consider, assuming there are taxable profits in the Ltd co at year end
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