Please bear with me - I'm frazzled now so not sure I'll explain properly!
One of my clients started trading as a partnership and then after only a few months went Limited.
Do the partnership accounts and Limited Company accounts need to be kept separate? ie. will 2 sets of accounts be done at year end.
They were incorporated in August 2011 and when I am now entering the transactions onto Sage for the Ltd company I have NOT entered anything Pre August 2011 - is this correct?
Until recently they were using the partnership bank account (until the new one was opened I presume) I have just gone through these statements and only entered the business transactions (because obviously there's lots of personal items also!!). I have opened a bank account in Sage called "partnership account" for these transactions but obviously won't be able to reconcile this account with the bank statements.
Hope you can make a bit of sense of this!
Am I doing this right (I am very doubtful at the moment! ) or made a total mess of it!
I haven't posted too many transactions if it makes you all feel better telling me I've done it wrong!
Having done the same ourselves three years ago I can confirm that everything is totally separate in terms of accounts for the two, as they are totally different legal and tax entities.
The Partnership will have to produce accounts up to its end of trading and the profits in relevant tax years would be dealt with in the normal way though self assesement.
The Limited company is completely different and its profits would be dealt with through Coporation Tax return after its year end.
I am sure more knowledgeable peeps will advise further, but use of Partnership bank account will certainly make book-keeping a little more fun, but I guess that any balance in the account could be treated and entered as Directors Loans to the new limited company, but you would first have to work out how much each director was effectively putting in.
Hope others come in soon with more detailed replies.
Ridesy is right. You will need to account for everything as two separate entities.
With regards to the partnership bank account, as it is in personal names effectively the payments and receipts are being made from and to the directors so by all means keep them in an account called partnership for now but ultimately the balance will need to be transferred to directors loan account.
On another point have all the invoices been transferred to the limited company name? It is usual to find items such as insurance and phone get missed as they are paid by direct debit. If they are not changed to the company name HMRC can challenge them for tax purposes.
) or made a total mess of it!
