I posted this earlier but it does not seem to have taken, so must be doing something wrong!
I have a client who was a sole trader but then became a partnership. My question is should I cease him as a sole trader and then create the partnership or is it ok to carry on the business to the year end but just add the change.
You should treat the sole-trader and partnership as two seperate trades, and these will be dealt with seperately on the tax returns. The original partner will have both sole-trader income and partnership income, whereas the new partner will only have partnership income. A partnership tax return will also need to be submitted.
It would be easier bookkeeping wise to keep two sets of books. If you've combined them they will need to split at the year end.
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"People who are exceptionally good in business arent so because of what they know but because of their insatiable need to know more"
Thanks, thats what I would have said, however a certified accountant (the new partner) and trainer with BPP has stated that the sole trader can become a partnership using the same year end dates without ceasation etc.
Before you ask, I am doing the books as the orignal guy wants some independance with the books to protect his interests, but I dont want to get into slanging matches as to whats right and whats not.
I've seen this happen before. Dustin is right that the original partner will have to complete both a self-employment page and a partnership page, and the new partner will just need to show his share of partnership profits.
Basically the partnership is a different business from the soletrader business and therefore the soletrader has ceased trading and ceasation accounts should be drawn up. The new partnership business then begins. I don't believe the accountant is correct on this one .
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