Profit allocation for partnerships

DaveC23 · ‎July 30, 2020

I currently use QB Self Employed for my sole trader business. Now starting a separate business as a partnership, 50/50 with two of us. My questions are as follows;

1. Which QB online subscription handles profit allocation for partnerships?

2. How do I ensure that only our drawings are reported as (taxable) and any money left in the business at year end is not all taxed? the reason I ask this is that in the first year, the other partner is unlikely to hit the threshold to pay any tax, so I need to know how to allocate this properly in the software.

Apologies, I am not sure even I understand my own question 2.

Jen_D · ‎July 30, 2020

Thanks for your interest with our products and congratulations on your business upgrade, @DaveC23,

All QBO versions such as, Simple Start, Essentials, and Plus are designed for different business types. These services can track a partner's disbursements and profit allocation. All you need to do is create a supplier profile for each partner and a separate equity account for them.

The steps to do that is listed in this Community guide: Add an owner or partner to your books

Regarding your second question, there are several reports in QuickBooks where you can track a partner's threshold for estimated tax payments and self-employment taxes. To get an immersive experience before purchasing, you can sign up for a free trial with us. This way you have an overview on which program you want to get.

Check out this link for our QBO feature comparison and free trials: QuickBooks Online United Kingdom Plans and Pricing

I'm also adding a few related articles to help you configure QuickBooks for a Partnership business:

Feel free to ask me if you have other questions about this topic or need other help with setting up your account. I'll be right here to help you. Have a wonderful day!

View solution in original post

Jen_D · ‎July 30, 2020

Thanks for your interest with our products and congratulations on your business upgrade, @DaveC23,

All QBO versions such as, Simple Start, Essentials, and Plus are designed for different business types. These services can track a partner's disbursements and profit allocation. All you need to do is create a supplier profile for each partner and a separate equity account for them.

The steps to do that is listed in this Community guide: Add an owner or partner to your books

Regarding your second question, there are several reports in QuickBooks where you can track a partner's threshold for estimated tax payments and self-employment taxes. To get an immersive experience before purchasing, you can sign up for a free trial with us. This way you have an overview on which program you want to get.

Check out this link for our QBO feature comparison and free trials: QuickBooks Online United Kingdom Plans and Pricing

I'm also adding a few related articles to help you configure QuickBooks for a Partnership business:

Feel free to ask me if you have other questions about this topic or need other help with setting up your account. I'll be right here to help you. Have a wonderful day!

DaveC23 · ‎July 31, 2020

Thanks Jen, this is super helpful and really explains it well.

One more question, apart from QBSE, do all levels (Simple Start, Essentials, Plus) offer this feature to add equity accounts etc.?

Many thanks, Dave

GeorgiaC · ‎July 31, 2020

Hi Dave,

Thanks for getting back to us. Yes, the chart of accounts in all of the QBO versions mentioned are completely customisable, so you can add as many equity accounts as you need :smiling_face_with_smiling_eyes:

Fiat Lux - ASIA · ‎July 31, 2020

@DaveC23

As an additional info, if you have to open a new QBO account, make sure to click the Buy button to get the discounted price for up to 3 months. If you purchase from the trial account, you have to pay the regular rate.

https://quickbooks.grsm.io/UK

Becky29 · ‎July 31, 2020

👍🏽

DaveC23 · ‎July 31, 2020

Thanks for all this useful info.

I am trying to take in all this extra info. So at the moment I use QBSE and when I draw wages, I categorise it as an Owner Withdrawal.

With the partners added as suppliers and the equity accounts set up in QB Online, how do I then make partner withdrawals? (wages).

And is any profit left in the account, unallocated, still taxed as year end profit like it is on QBSE.

Extra info; this is not a Limited Company partnership, it will be like a sole trader partnership.

QB Online seems a lot different to QBSE.

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