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Please help..... is this allowed?

2 sole traders working in the same room together splitting rent and utility bills?

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hello can anyone help? Myself and a friend want to rent a room together to split rent and utility bills, but we both want to be sole traders and take our own bills/money ect. We would be completely separate so that we could work our own hours ect.... is this possible??

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16th Feb 2019 20:35

Who will the landlord and utilities companies send their invoices to?

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to andy.partridge
16th Feb 2019 21:16

Hadn’t really thought of that to be honest.

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By DJKL
16th Feb 2019 20:41

Do not see why not, I run numerous entities from one room.

The key is either to square with landlord ,which is not impossible,we have a few smaller business entities that share licences to occupy studio spaces we rent out, or one takes on lease/licence and agrees with landlord re a sublet of part to the other.

Obviously vat on costs may become trapped, depending upon registration status of both, but suspect this will not likely amount to a lot so hopefully does not kill the idea.

p.s. when we started renting out studios a few started on this basis but some of them quickly fell out with one another- a bit like single tenants sharing a flat- so caveat emptor.

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to DJKL
16th Feb 2019 20:58

Thank you. Yes I’m hoping we don’t fall out (I don’t think we will) I think our land lord will be happy to split the rent for us, I just wasn’t sure if what we want to do was legal or not?! So we could name the salon but both have to work as sole traders under our own names? Sorry I am completely lost in all this

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By DJKL
to Vickylouisehol
16th Feb 2019 21:14

Sorry, had not appreciated both business entities were to undertake the same activity and the premises were a hair salon, given HMRC interest re vat registration in such business operations you really want to be sure how you intend to operate cannot be challenged.

Thinks like equipment and consumables etc ought not to be shared, specific chairs should be used by each business plus distinct tills and I would strongly suggest you get an experienced accountant to look in detail at the proposed arrangements rather than relying on posts on here.

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16th Feb 2019 20:43

Are you both happy to split the bill 50/50? Why not ask the suppliers to put 2 names on the bills? Shouldn't be any problem

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to Issabayev
16th Feb 2019 20:55

Yes both happy to split Bills just want to keep our clients/money separate as one of us has already got a busy clientele and the other one not yet. So we could both be sole traders is that correct?

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to Vickylouisehol
16th Feb 2019 21:18

Yes, you both can be sole traders. But it will be a good idea to put names of both of you on the bills. In case of any (unlikely, but still) questions from HMRC you will have bills on your names to verify that you both are using the room

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to Issabayev
16th Feb 2019 21:57

Joint names on the invoices- would that not make HMRC think this is a partnership?

Op, how would you prove it is not?

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16th Feb 2019 21:14

If you are in the same business do review the disaggregation rules, as HMRC may challenge your separate-ness for VAT purposes.

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to leshoward
16th Feb 2019 21:19

Thanks, we are not expecting to be earning any where near that as we are both mums trying to fit work in where we can, hence why we will be doing different hours etc. Maybe in the future if we did earn that we could then go into business together.
Do you know if we can advertise together?

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to Vickylouisehol
16th Feb 2019 21:56

Threshold between you could by easily be reached, couple of colours a day and you're not far off.

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17th Feb 2019 07:57

It's a question of fact, not law. There may in fact be a partnership or there may in fact not be a partnership. A good test is: what would Jo Public think?

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to Tax Dragon
17th Feb 2019 07:58

Which was kind of Andy.p's opening point.

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to Tax Dragon
17th Feb 2019 08:20

I love the way you talk to yourself, out loud!

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to Tax Dragon
17th Feb 2019 09:51

Yup.

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