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4 March 2011

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What is the best way for our practice to fund the partners’ personal tax, so we can avoid arguments if the joint account is short?

Forward planning is the key to solving this issue. From our experience of working with customers, the most appropriate answer is to make a monthly provision into a deposit account to ensure funds are allocated to pay personal tax. And because you will know the date your tax bill will need to be paid at the end of the financial year, you can take advantage of more favourable longer interest accounts.

However, if this is an immediate problem and your practice needs to find the funds to pay the tax bill, a short-term loan should be considered where you can spread payments over an agreed period of time.

With both of these options it is important to approach your financial provider to discuss the best course of action so that they can understand what will work best for you. A business review would help to identify potential issues such as the one posed in this question so that it can be considered before it becomes a problem.