Additional person working in sole trader business

A

aimsir_te

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Hello,

I am a sole trader and my co-habiting partner has been working for the business part-time for the past year. He is receiving social security from the state as part of a VTOS program but this is about to cease in which case he will begin working for the business full-time.
I am wondering which is the better option, make him an employee of the business or change the business from being a sole trader to partnership?


We are not married but are co-habiting.
No dependents.
I was previously a PAYE worker for 10 years. He spent time abroad and has intermittently been in receipt of social welfare here.
Our immediate concerns are to make the business profitable.
2018 projected turnover is 50k of which 15k is profit. Projected turnover next year is 70k with 45k profit.
We have remaining business loans of 10k
No mortgage but will probably jointly take on a mortgage in 2019/2020, to the value of 180k.
No other debts.


Thank you
 
Last edited:
Impossible to answer such a question without a lot of detail on your respective circumstances and plans. Get professional advice.
 
Yeah but we still know nothing of your respective skillsets and functions in the business, nor even in what sector you operate. Nor nothing of your personal relationship and respective short- and longer-term life and career goals.
 
only advice I can offer is to choose your partner more carefully than a wife/husband. You have more connection than a married couple. As a partnership you each need to be clear on who does what for the business. When a partner makes a business decision it also falls on you so you need a good strong trust between you.
 
We have an artisan food product that we sell at markets. We do everythingg in the business and share the work load. Its a time and energy demaning enterprise as we grow the vegetables that go into our product. We do not have clearly delineated roles but naturally we fall into doing tasks that we are more suited to.
We may dissolve this business in a few years or sell it on. It will never grow into a ltd or we will never take on additional employees.

We want to know if it is more tax efficient to go partnership or employer/employee.
 
aimsir_te said:
We have an artisan food product that we sell at markets. We do everythingg in the business and share the work load. Its a time and energy demaning enterprise as we grow the vegetables that go into our product. We do not have clearly delineated roles but naturally we fall into doing tasks that we are more suited to.
We may dissolve this business in a few years or sell it on. It will never grow into a ltd or we will never take on additional employees.

We want to know if it is more tax efficient to go partnership or employer/employee.
Click to expand...

The bit I've highlighted suggests a trading partnership, not an employer/employee relationship. Tax efficiency has nothing to do with it really. It's all about your partner and their function in the business. You can't validly treat them as respectively a partner or an employee if the facts suggest otherwise.
 
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