Running two business partnerships - best way

System
System Posts: 100,534 🤖 Admin 🤖
edited 12:08PM in AAT member discussion
Help please. I am a Partner in an automobile business (not Litd) and about to invest in another new one. Let's call them "Business A" and "Business B" respectively.
We don't like the existing name of Business B but it doesn't make sense to change the name of a successful business until we are established owners of it. We therefore have to trade under the existing name from our customer and supplier perspective, but want it to be either under the umbrella or part of Business A in some easily accounted way. For example "Business A trading as Business B" or "Business B, a Business A company". And would we have to become Limited? Is it easier just to run the two seperately? Ahhhhhhh! :cry: Suggestions on options/the best way forward would be appreciated please? Thank you.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Running two business partnerships - best way

    If both businesses are partnerships then there are no restrictions as to how you name the second business.

    Both examples that you gave would be fine.

    Many accountancy firms when they merge will have both names on the headed paper for a period of time, in a similar fashion to those you have suggested.

    Whether or not you become limited is a separate issue and the trading name would not be an important factor in that decision.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Running two business partnerships - best way

    Dean

    Many thanks. So for clarification -
    If I was to choose the "Business A trading as Business B" option, then am I right in thinking that Business B then becomes a subsidiary of Business A?
    It would be great to be referred to an example set of account for a similar set up should you or anyone reading this know of one I can access. Cheers, K
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Running two business partnerships - best way

    One of the main advantages of an unincorporated business is that you are not subject to regulatory control over how your financial information is presented or how the legal ownership is structured.

    You can run a series of separate partnerships, you can run separate businesses under the same partnership name, you can say that one partnership is a subsidiary of the other partnership..

    Providing all partners own all the businesses in the same ratios then it makes no real difference.

    From an accounts point of view, the partners are probably the only people that are ever going to see the accounts (or perhaps also the bank). It is therefore completely up to you how you present them.

    From a management perspective, I would personally prepare two sets of accounts because I would like to see how one business is doing compared to the other, regardless of whether you consider one to be a subsidiary of the other.

    When it comes to preparing the tax return, however, I may just lump them all together as a single business. Particularly if there are going to be a number of shared assets/resources/staff between the two.

    From the information you have given it appears that this is more of a marketing issue (i.e. maintaining brand loyalty) rather than an accounting one.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Running two business partnerships - best way

    Dean

    Thank you, very helpful advice, and not as complicated as I thought it would be. :D

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