2 companies?

Suejw

I have just gained a new client, actually I have known him for years as he is the husband of an existing client. He has recently started up a consultancy business but he also repairs cars - with me so far?? He has given me a load of purchase invoices but they are not in his consultancy name, they are in the name of his motor business. What is the impact of him having two businesses for accounting purposes, I am supposing that I will have to set them up separately and run them separately, I use Sage for this and what about his tax return??? Any advice?:huh:

Laura8192

Are they limited companies or sole traders? If both are sole trader, then income from both has to be added together to work out if under the VAT threshold. People think if they have 2 "companies" then they are able to avoid registering for VAT but the VAT legislation looks at the total income per legal entity. A sole trader is a legal entity, doesn't matter if he has 1 business or 4, all the income gets added together.

If one or both are Ltd Cos then the VAT threshold applies individually to each business.

I know you didn't ask about VAT but this is the main reason clients tend to want to split businesses in two.

Regarding invoices and who they are addressed to, if there is a Ltd Co involved, invoices should be addressed to the correct legal entity.

If he is a sole trader I personally would suggest it doesn't matter who they are addressed to, as his income for the year will be assessed as a whole? Someone else with more experience than me may be able to help more.

Suejw

Thanks Laura, I did look on website and saw that as a sole trader it doesn't matter how many "businesses" you have as you correctly say it is the trader as a whole that is assessed. If it doesn't matter about the invoices then that makes life easier, just wasn't sure if I should treat each business separately but it really doesn't matter as I will have the same amount of invoices to process whichever way I do it. Thanks again

JodieR

As the businesses are of a completely different nature I would prepare two sets of accounts as you'll need to complete two sets of supplementary self employment pages on the tax return. If there are costs which could relate to either business then there's no tax advantage to including them with one business or the other or apportioning them over both, you would just deal with them as you think appropriate.

Suejw

Thanks for that Jodie, that was my initial thought but I was hoping to do just one set of accounts and books but I can see that you are right in what you say as they are totally different. How would you charge the client? I do his bookkeeping as well, would you charge for two different companies?

lor

Hi Sue,

I would charge for 2 separate companies as you are doing 2 lot's of work.

Cheers Lor