Taxable Profits

In the case of a sole trader you will be taxed based on the taxable profits that your business makes, whilst in a partnership it will be your share of the partnerships taxable profits **

In simple terms, taxable profits are:

Turnover (your sales invoices)

Less Allowable costs (most of your businesses expenses)

= Taxable Profit

It is in reality a bit more complicated than this

Remember also that when calculating your personal tax bill you have to factor in other sources of income as well as your self-employment. This might include Employment Income, Rental Profits or Investment Income. For a list of typical tax return items see here.

** Partnerships can be a good tax planning tool as if there is no official Partnership Agreement that stipulates an exact profit split then the partners can change the split of profits each year to most suit their individual tax positions.