Hi, I would love some advice on this problem. I have two clients who are sole traders and live together, one runs a cafe and the other a delicatessen in separate business locations. However, all correspondence, invoices etc go through one email address. Some deliveries are made to one business and the owner then collects them for the other business. At times both of them work in either shop. Business names are very similar. One of the businesses is now about to reach the VAT threshold, the other one will probably also hit this in the next 6 months.
I know I have read somewhere that HMRC could view them as one entity but I can't find it anywhere. Have I imagined this? if not can anyone point me in the right direction as I would like to share this detail with them.
I would also be interested to know what you would advise them to do? Should they become a partnership or Limited company?
Can't recall nor see your background at the moment so on the latter you need the Accountant to run the numbers. If you are their Accountant then you need to run their numbers.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I would advise them to run their businesses as properly seperated entities and stop assuming that the little things like deliveries and shared email addresses do not matter... Most important one, can I assume that they are seperate bank accounts in the names of the businesses?
As for the form of their businesses there is a lot to consider and I would be adverse to advising without knowing the intricacies of the business(es) in question.... That said, I personally never advise on partnerships as a business model... The seemingly innevitable acrimonyous divorces are a lot messier than with incorporated entities.
kindest regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Denise Forrest wrote:What do you mean by run their numbers?
The accountant needs to "run the numbers" using both business models to determine in which scenario the client will be better positioned (all things considered including eventual exit strategies).
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
if not can anyone point me in the right direction as I would like to share this detail with them.
