Does any one out there do accounts for bed and breakfast businesses. There are a lot of them around me and I'm getting a few enquiries but a little unsure of how to treat them, well just need someone to confirm my thoughts are correct really. Main questions are: 1. If a husband and wife team is it classed as a partnership 2. As a small business I assume they have to register to pay Class 2 NI contributions 3. If they spend a lot of money on getting the property into a state to run as a B&B business can they claim for the work on the whole of the house or just the part they use for guests 4. Running costs of house, can they only claim pro rata for part of house used by guests 5. What about mortgage costs (realise this gets complicated with Capital Gains but if they are running it as a business Capital Gains is already a consideration)
1 - It could either be a sole trade or partnership, dependant on who owns the property, does the work or if a formal or informal partnership agreement is in place.
2 - class 2 will be payable on self employment, unless their earning are small (can't remember the lower limit off top of my head) in which case you could apply to defer the class two liability,
3 - if any of the costs are of a captal nature in relation to the structure this would generally only be of relivance to a futre CGT calculation. Any furniture etc for guests room could potentially attract capital allowances. Need to be wary of any repair costs which cross over between personal and business expenditure.
4 - not a definitive answer but im sure some sort of pro rata of costs based on occupancy would be applied, but someone on here might want to expand on this.
5 - Again I would assume that the interest element of the mortgage could be pro rata over occupancy and applied to the P&L.
A very short answer but happy to look into any aspect of it in more detail if needed. Never actually had a client with a B&B so the above has only been said in general terms.
-- Edited by adi2402 on Friday 23rd of April 2010 05:15:58 PM
__________________
Forgive the typo's I generally do not proof read. Just lazy I guess!
Seems much as I was thinking, wanted to make sure there wasn't any special treatment for B&B businesses that I was unaware of as all my searches come out blank - which in itself would suggest there is no specail treatment. Will make sure I am fully prepared for my first potential B&B client next month.
But if anyone else knows anything more I would be greatful for any input.
