Hi all - could anyone point me the right direction of the things which I should consider when introducing a new partner to an existing sole trade?
Many thanks
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Duh? Of course you can
Sole trader simply becomes a partnership (by definition). There is no 'cessation' of the sole trader business.
You need to tell taxman, bank, landlord and update info on website, business stationery and all other places which indicate the nature of the business and the business owner.
The other IMPORTANT questions to consider when forming a partnership include deciding: how will you share profits? in what proportions will you own the business (need not be the same a profit shares)? who has signing authority on the bank? who can commit the business and incur debt? who can hire and fire staff? what happens when a partner dies, or if they go bankrupt? Who decides how much money can be drawn out of the business bank account and when they can do this? Who can apply for a credit card in the name of the business? And so on. (That list was straight off the top of my head)
These are all issues to address in a partnership agreement. There are many more.
Mark
Mark, slapped wrist ...
... you omitted the very important what if one partner is ill and can't work.
One tip that is a great help if one Mark did mention occurs, the death of a partner. What is a good idea is to take out life insurance so that if a partner dies their estate get the insurance payout and the remaining partner(s) can carry on the business without getting involved in legal wranglings or having unwanted partners foisted on them. This should be reviewed regularly to ensure the insurance is appropriate to the value of each partners share.
Occa is fundamentaly wrong, the business does not cease, or that would trigger overlap relief etc, which does not happen - similarly if a partner n a two partner business leaves the business does not cease either, it again just changes status.
Doh! I missed out loads Old greying Accountant
And I can't afford a slapped wrist when trying to be helpful - I even gave a caveat that the list was off the top of my head. Slapped wrists are painful. Unpleasant.
;-(
Sorry Mark ...
... but illness one very important, as I found out in my previous practice - luckily (sensibly?) we had provisions in place which when one partner became seriously ill we had to implement.
Best advice is see a solicitor and get a proper agreement drawn up - well worth a couple or few hundred quid now to potentially save thousands in the future.
As ACDWebb says, check VAT Reg etc as new partner should be indemnified against anything prior to his/her admission (e.g. underpaid VAT, claims by cutomers on previous sales etc etc!).