Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: kris martin on August 16, 2008, 12:33:14 am
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i was just wondering how you go about joining businesses with somebody, has anybody done this before (with a fellow WC) do you merge the 2 businesses together or do you end both businesses and start up a new one (partnership) taking over the customer base... this might seem like a daft question (ask the accountant sort of thing) but i was wanting to know the general gist of it...
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i was just wondering how you go about joining businesses with somebody, has anybody done this before (with a fellow WC) do you merge the 2 businesses together or do you end both businesses and start up a new one (partnership) taking over the customer base... this might seem like a daft question (ask the accountant sort of thing) but i was wanting to know the general gist of it...
I've never done anything like this.
I would have thought you would look at the value of each individual business (poles, vehicles, systems, cashflow, profitability, customer base).
Then one person would probably need to 'top up' or 'inject' a sum of money to get to parity in the new combined business.
Unless one person is bringing a certain expertise (maybe he's a red hot salesman or has excellent commercial contacts) then you could say that in itself is worth a percentage of the new combined business.
I suppose it all comes down to your own gut feeling over which way to go.
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we have already workked together loads and often share each others equipment and even chipped together to buy equipment, it dosnt really matter if one of us as more than the other once joined it will be 50/50 in all aspects... its just the thought of merging sounds complicated but too close the businesses down and create a new one sounds a lot more simple and was just wondering if you can actually go about it this way...
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You would need to get eventhing down in writing! any partnership can go bad!
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Yup.
He was a mate and it was a friggin disaster. He'll read this and probably laugh to himself about it.
We dont work together anymore and now we're chums again ;D
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dont forget you will be liable for your partners tax if they default :(
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Remeember though the vat threshold will still be the same all though there is two earnings.
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we have already workked together loads and often share each others equipment and even chipped together to buy equipment, it dosnt really matter if one of us as more than the other once joined it will be 50/50 in all aspects... its just the thought of merging sounds complicated but too close the businesses down and create a new one sounds a lot more simple and was just wondering if you can actually go about it this way...
You close both down, and pay up the tax owed, then open another business and start a fresh.
Someone has already said that your still liable for all the tax if the partner does not pay, |I m8 of mine got stung 11k from a partnership
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You close both down, and pay up the tax owed, then open another business and start a fresh.
Someone has already said that your still liable for all the tax if the partner does not pay, |I m8 of mine got stung 11k from a partnership
i thought that this would be the easiest way... i'm not worried about him not paying his fair share this would never be an issue, i have worked with him on a very regular basis for 8 years now, never a cross word and i've know him all my life (best buddies if ya like) and i'd trust him with my life so that really isnt an issue, i would be sceptical if i diddnt know him that well but we are both thinking share costs, van, fuel, equipment etc....
what are the disadvantages of VAT registered
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Your charges will have to go up
You will need to spend more time on bookkeeping
You only have to register if you are exceeding £64 k per annum
As separate entities you can probably avoid VAT registration
You will be an unpaid tax collector !
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Your charges will have to go up
You will need to spend more time on bookkeeping
You only have to register if you are exceeding £64 k per annum
As separate entities you can probably avoid VAT registration
You will be an unpaid tax collector !
how would you go about getting things like van etc in both of our names and is it legal to stay as seperate entities?
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why not keep the work you have and just team up with vans etc etc, if you want to work together then just split the profits from the work you both do, at least that way you will both still be liable for your own affairs and still own your own work if it all goes wrong
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Kris.
This advice is given to you in both yours and your mates best interests.
DONT DO IT!!!
You have a lifelong friend and are happily working together as seperate entities. Keep it that way PLEASE!!
There is a very good pice of advice that is so true.. DONT mix friends and family with business. Matts advice above is right.
Andrew
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why not keep the work you have and just team up with vans etc etc, if you want to work together then just split the profits from the work you both do, at least that way you will both still be liable for your own affairs and still own your own work if it all goes wrong
is this a legal way of doing it because if you can do it this way i would prefer to do it this way but also how would you go about getting finance for van through the company and splitting it off tax deductions...
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like andrew said DONT DO IT i done it and it went all tits up i will never go into businesse with any 1 again and lost money out of it 2 .
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In a partnership all the partners are liable for the tax. So if your partner doesn't pay up his share, then the tax man will come knocking on your door. Not a problem with a husband and wife team, but I wouldn't want to gamble it with even a good friend.
Simon.
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ok then, we want to work together, share equipment, costs, van etc can we do this and be employed but still cut the bills down the middle????????
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I dont have good experiences with partnerships, not many people are able to share 50/50, they will always feel like they deserve more than you, just work together as said above, but keep books etc seperate i would say.
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I was wondering if I want to make my wife a partner how do I go about this? Do I just inform the accountant before he sends my return in? or do I have to notify the tax office? or am I allowed to claim my wifes tax allowance as she doesent work? can anyone advise please - jimmy
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jimmy
You will need to inform the tax office if you want to set up a partnership with your wife. It's not hard to do and does let you use your wife's personal allowence, she will get a tax bill as well. You could always let your accountant take care of it and just sign the relevent forms at the end of te day.
Simon.
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Thanks but If I wait until I next see accountant which will be the end of this tax year will he be able to backdate the forms for this year or will we loose out by waiting?
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I'd make an appointment with the tax office then. I'm not sure if it can be back dated.
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Thanks, I dont wont to miss out on using both allowances.
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ok then, we want to work together, share equipment, costs, van etc can we do this and be employed but still cut the bills down the middle????????
It works until something is put on paper,i don`t know what it is but things seem to go wrong and you really get to see what your so called freind is really like.
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Kris, don't, not only what andrew and matt say but also....
Remember the vat threshold, 64k? well two of you will exceed this, and flat rate at 10% is £6,400. That's a big bill for the vanity of proving how much you and your mate trust each other.
Matt suggestion of working together as a team was a very good one.
However, you must be carefull because there is a thing called artificial seperation. This means that if the tax man believes you are partners in all but name he will tax and back tax you accordingly. What this means is say you were husband and wife (I know you are not but just say) you are both window cleaners and both turnover 63k each. The tax man would consider you partners because you ar carrying on the same business from the same address.
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Kris, don't, not only what andrew and matt say but also....
Remember the vat threshold, 64k? well two of you will exceed this, and flat rate at 10% is £6,400. That's a big bill for the vanity of proving how much you and your mate trust each other.
Matt suggestion of working together as a team was a very good one.
However, you must be carefull because there is a thing called artificial seperation. This means that if the tax man believes you are partners in all but name he will tax and back tax you accordingly. What this means is say you were husband and wife (I know you are not but just say) you are both window cleaners and both turnover 63k each. The tax man would consider you partners because you ar carrying on the same business from the same address.
Aaaahhh, I wont go into details but......
My accountant told me something about this a few years ago -
You are two separate entities but come together on certain projects which require extra manpower, skill or equipment.
You have a SYMBIOTIC RELATIONSHIP
Each business is indeed a separate entity but you have trust, skill, knowledge, understanding and a working relationship which can be useful (but not exclusive) to contracting work to the other party.
...Basically, you know the other party does good work and can therefor reward work to the other party without the inference that it is a 'wholly owned' party to the main contractor.
Think about how Laing, Wimpy, Balfour Beatty always get awarded contracts via each other as sub-contractors. There is no suggestion Balfour Beatty owns Laing.
...But they do trust the other party to complete work to a given standard, price and timescale.
Thats a Symbiotic Relationship ;)
You need a sh*t hot book keeper/ accountant to keep it all above board.
...You wouldnt want the tax man to think you were pulling a fast one would you ;)
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Thats a Symbiotic Relationship ;)
So's this
(http://www.arachnoid.com/symmetry/images/clownfish_anemone_symbiosis.jpg)
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You have a SYMBIOTIC RELATIONSHIP
like the Gungan's and the Naboo
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You have a SYMBIOTIC RELATIONSHIP
like the Gungan's and the Naboo
The who and the what!!!!
...time for me to go googling I think!
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I used to be a partner with someone. it was ok for a while but i found it hard when 2 people pull in different directions, people change, there opinions change, their directions change. always having to think if they would agree or not. It was a pain in the arse getting the LTD company rapped up but we simply closed that account and got the accountant to strike it off.
When i look back on it i'm far better off financially than i was as a partner, my business has nearly tripled in size since but if i was to think that i had to give away 50% of my earnings today it gives me a cold shudder!!
If you have motivation and savvy then don't do it, go it alone
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Can you not keep both companys going so you got 2 brands driving around but use one as the main one and then use the other as a sub contract company on paper.
Chris