Start-up Partnership - quick question

imeldabye
imeldabye Registered Posts: 147 Dedicated contributor 🦉
in General accounting discussion
Hi there
I have a new client who is setting up a business with a mobile coffee van. She was intending to run this as a sole trader, however the bank have lent the money to her and her husband - ie as joint borrowers in a joint account because the loan is secured against an asset which is held in her husband's name. My question is - do you they have to submit biz tax return as a partnership and (sorry- 2 questions!) should they have an agreement in place. In practice it is her business and she will be running it.
thanks, and apologies if this is an incompetent query......

Comments

  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    There is no need to register as a partnership. The loan has obviously been made in joint names for security reasons for the bank and as long as you can show that all the loan money has been used for the sole trader, then there is no reason why the loan would not be tax deductable without forming a partnership.
  • imeldabye
    imeldabye Registered Posts: 147 Dedicated contributor 🦉
    SO six months on and i have been doing this sole trader's books, but it doesn't bring in enough income for the familiy and she has now found a full time job and the husband has decided to take on the coffee van. I was intending to de-register her as self employed and then for her 09-10 return have the sole trader/self employment period profit/loss for 6 months alongside her 3 months (jan-march) of employment. Correct? However, how about her husband? shall i just register him self-employed and start his first day of trading from the day she starts her new job- ie stops the coffee van?? Effectively this would mean him assuming responsiblity for the business, and all income/expenses/profit/loss being transferred to him?
    a big thank you to anyone that can confirm this is the right course of action.
  • imeldabye
    imeldabye Registered Posts: 147 Dedicated contributor 🦉
    sole trader cessation and husband taking on the business

    sorry but does anyone have time to give me their thoughts? my thought today was - what to do with the capex purchases made by the wife in her first year trading- but also now in the husband's first year trading? -this is the same asset! aarrgh!

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