12 - Sole traders and partnerships

What are the rules with setting up sole trader and VAT reg?

If you anticipate sales above threshold in 30 days from commencement, register for VAT from day 1

What are the rules with losses in first four years of partnership?

Can be carried back 3 years and set against employment income

is employers liability insurance mandatory?

Yes

Who can apply for financing via fixed charge and floating charge?

Fixed - all types of businesses

Floating - LLPs and limited companies

What is annual accounting scheme?

Allows single VAT return per year with monthly payments on account

What is flat rate scheme?

can reduce VAT a trader needs to pay

What are new VAT rules from 1 Jan 2021?

Under NI protocol, NI remains aligned with EU VAT rules

What do you need to check if operating business from home?

Might need planning permission

Title deeds need to be checked for restrictive covenants

Terms of insurance policies should be checked

The original tenant under a lease entered into before 1 Jan 1996…

is invariably liable, even after transferring lease to an assignee

Does a partnership need ot be documented in writing?

No - can be expressed orally or implied from conduct

What is a partner called who does not participate in the day to day?

Sleeping partner

Can a NFP operate as partnership?

No - must be carried out with view to a profit

What are partnerships governed by?

Partnership Act 1890

Advantages of written partnership agreement?

fills in details PA 1890 does not cover

serves to override terms otherwise impliedc

can bespoke clauses be included in WA?

Yes

Every partner is an agent of…

the firm and their other partners

What does it mean if an individual partner pledges the credit of the firm for a purpose not ocnnected w ordinary business

firm is not bound unless partner is specially authorised

what does authority depend on?

perception of the third party

How is partnership property distinguished from personal property?

according to rules set out in Statement of Practice D12

3 rights/duties of a partner?

Bound to render true accounts and full info

Account for profit made

Account for profit made in business of same kind

What are implied terms of PA 1890?

Partners entitled access to partnership books

Partners take part in mgmt

Decisions taken by majority vote

Partners not entitled to remuneration

Capital/profits/losses shared equally

Entitled to 5% interest on advances

Partners indemnified for liability in normal business

what are three key rights of partnership interests?

right to surplus arising from sale of property

right to share in firms profits

right to working capital on dissolution

What is the order of distribution on dissolution?

External debts

Advances over capital contribution

Capital contribution

Profit share

When must a trader notify HMRC of VAT de-reg?

within 30 days

What is a general partner?

they have full, unlimited liability

what can limited parnters not do?

take part in mgmt

withdraw their capital

bind partnership in contract w third party

dissolve by notice

key features of LLP?

partnership is corporate body w legal separate identity

liability is limited to amount of capital contribution

What sets out rights and duties of partners in absence of partnership agreement?

LLP Regulations 2001

What do the two designated compliance members do in an LLP?

file notices w CH

sign/file accounts

appoint auditors

set out statement if insolvency

How long can a partnership continue with one member?

6 months before being wound up by the court