I have a client who is currently a sole trader whose financial year ends in Sept. On April 1 he and a friend became a partnership. I would have thought that as there would need to be a partnership tax return done that I should probably start a new bookkeeping file for the partnership but the accountant has said I should carry on with the same file. So the accounts will have 6 months of him being a sole trader and then 6 months of being in a partnership. Does this sound right?
I thought a sole tradership and a partnership were two different entities with the need for different books. He'll remain personally liable for both businesses' debts unless the partnership is an LLP. My question is whether your sole trader sold/transferred his business to the partnership or kept it as it is? Whatever the answer is, the partnership should have its own books and accounts. Just my non-sensical rambling. Accountants recommend partners to set up a Partnership agreement between the partners. If such a thing is not in place, then the provisions of the Partnership Act 1890 apply in future.
I shouldn't worry about it. It's probably just a logistical thing where he has experienced less problems with just carrying on the file. It may be that the accountant has reason to think the partnership won't last. Could be any reason. Whatever it is, you have his instruction and don't have much choice but to follow it, even if you're proved right in the end.
