Business Formation

[Brian McIntosh]

Hi All,

Just a quick qusetion. Is it possible for 2 people to jointly buy a business but only one person run it as a sole trader or are there rules that govern this sort of thing?

 

[Former Member 1]

Yes and no....

By definition the agreement between the two people to buy the business establishes a partnership. Now, it's up to the two how ownership is divided up. And likewise how labour and drawings from the business are allocated. But ultimately joint ownership means joint liability.

So theoretically it's possible... but I'd advise, in the strongest possible terms, that you really need a) an accountant's advice to decide whether this really IS the best way forward for your activity and b) a lawyer's help in drawing up the partnership agreement...

 

[Scottish Business Owner]

Brian,

Matt has pretty much nailed it. You should be able to create a partnership agreement that details all this but it will be quite tricky and you will need some professional help. Is going Limited an option with this? What would be your concerns over going down that route with it as another option?

 

[Brian McIntosh]

Just to put you guys in the picture, my wife and I are buying a business which includes premises. We are buying the whole lot jointly but she will run the business and the profit will be her income. I'll still be taking snaps. I will be seeing an Accountant, Lawyer, Bank Manager, etc but I thought I would get a few pointers beforehand from you kind people.

 

[Scottish Business Owner]

Brian,

I think the main issue you will have is what the Revenue call income shifting. Where couples try and shift the income onto the lower threshold taxpayer. I may of course have got this completely wrong but it's important you set this up correctly to avoid a challenge by the Revenue at a later date.

I would make sure you ask the accountant about this particular subject as i'm sure they will be well aware of it. I dont think what you're trying to do isn't acheivable but I can see the pitfalls if it's not done correctly.

I do hope it all goes well though

 

[Brian McIntosh]

Cheers , That's given me food for thought.