188体育

Although a partner could not also be treated as an employee of the business, the partnership agreement could provide for a partner to draw a salary. A partner鈥檚 salary was not earnings from employment but an allocation of the self-employed profits. Similarly, partners鈥� salaries did not count as business expenses; they were a share of the net profit and, where formal accounts were produced, would normally be shown as an extension of the Profit and Loss Account. A percentage of the profit remaining after allocation of salaries could be paid in addition.

Example

A partnership of 2 people made profits of 拢30,000. The agreement was that the profits were allocated equally after payment of a salary of 鈥溌�20,000 to partner 鈥淎鈥�. After deducting the salary, 拢10,000 profits were to be divided equally giving each partner 拢5,000. Partner 鈥淎鈥� 鈥檚 share of the profit was 拢25,000 (salary 拢20,000 + 拢5,000) and 鈥淏鈥� 鈥榮 拢5,000. If the partnership had only made a profit of 拢8,000, partner 鈥淎鈥� would be allocated all the profit because of the agreement that he or she was due a salary of 拢20,000 before the net profit was allocated.