Hi all, I need to prepare the accounts for a client who changed to a limited company part way through his financial year. I need to prepare partnership accounts to date of incorporation. Regarding the closing balances of the partnership, can these be brought in as opening balances on the limited company? E.g. Trade creditors of £9000 on the partnership, can these be treated as opening creditors on the limited?
Heres a quick question, that I just don't know the answer to. (sorry not trying to hijack the thread) Can the partnership be sold to the ltd company lock, stock and barrel? Creditors, debtors the lot?
Remember, there's a chance that the debts existed before the company even existed.
Kris, the assets which would typically be sold to the limited company would be stock, fixed assets and goodwill. In many instances of incorporation, the debts are paid for by the company and any money received from debtors may be paid into the company bank account, but they form part of the DLA.
An incorporation should mirror the sale of a going concern - if you were buying the assets of a business, you wouldn't want to also take on the old company's creditors (possibly including Crown debts).
If the company is continuing to pay the HP on a van, would the repayments also go through the DLA?
What about opening bank balances? The bank account was still in the name of the partnership for 5 months after incorporation. When it was closed the balance was transfered into the limited company bank account.
Prepayments at cessation of the partnership, can they be introduced as opening prepayments in the ltd company?
I found out that the partnership ceased on 31/7/10 and limited company commenced 01/8/10.
