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Employee or partner

Employee or partner

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Hello, I am new to the forum and looking for some advice please. I have an accounting background and my husband is thinking of setting up his own business (graphic design). I am interested to know if we would be better off, from a tax perspective, with myself as a partner in the business or an employee. It will not be a limited company, it would have a small turnover to begin, but we are hoping to develop a good business over the next few years. Many Thanks for your time.

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By frustratedwithhmrc
13th Dec 2013 03:20

Why not a Limited Company?

Given that you are concerned with the tax effectiveness of your business, why would you reject the limited company approach?


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By blok
13th Dec 2013 13:02


It difficult to say without knowuing your income position

If you wish to pay salaries (from a company) and take advantage of your £20k Income Tax personal allowances, a company will require PAYE registration.  A partnership won't.

The company will require extra reporting requirements to be carried out.

The list and comparisons are long, but from what you say, I'd go with sole trader or partnership until such times as there is a business worth incorporating and then engage an accountant.


so -

Income Tax & NIC - p'ship better (less compliance)

VAT - probably no difference

PAYE - partnership is better

Private use of cars - partnership normally better




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