My business partner and I have a joint account. We are not a partnership for tax reasons but just share 50% of costs and profits. This partnership is just an extension of a business of my own so my main bank account is separate to this.
Is there a way to tag the entries in order to be able to have the costs and income represent my share?
You wouldn’t normally tag every single entry as a 50:50 split. What you would do is when you want to draw from the business run a P&L and then transfer the drawings to each of your personal accounts, tagging as a transfer to the proprietor drawings account.
I would definitely run this by your accountant as there are many potential factors when dealing with partnership drawings.
Hi Glen, thanks for the reply.
I can see this working in the instance that the joint account is only the one account that is used for the business, but because there are 3 bank accounts (2 personal) and more than one credit card accounts, the costs in the end would be difficult/time consuming to go through all the joint account transactions to extract just it’s 50%.
We don’t need to be linked as a partnership for tax reasons, we just share certain revenues and costs.
Maybe there is a possibility of a new Tagging item which can/automatically adjusts the bank entries for joint accounts into the Sales & Purchase invoices for the individual’s share of the partnership?
Or have I got this wrong?
I’m not sure exactly what you’re asking for would be implemented? But I’m quite sure it’s non-standard in terms of accounting practices.
I would recommend looking into forming a Limited Company, there are probably workarounds for what you are trying to achieve but the way you’re handling this now will add a lot of complexity to your accounting. Even if you don’t become Limited it would be advisable to setup a single business account and trade from there.
Ok, I take your point, but my needs are unconventional so I’ll just have to arrange a work-around.
Thanks for your help.
I think it could be achievable by setting up several bank accounts, one for each of you, and when you each pay something from your own accounts you just need to make sure that its entered as a payment from the correct persons account. I’ve got a couple of clients who have the same type of set up, and what i’ve suggested helps them to see how much each has contributed quite clearly.
I hope this helps!
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