Buying a micro business. Advice please

[Simond S]

Hi, we are looking to buy a micro business.

Turnover is £10k per month. It is not a ltd company.

My question is. Who does the tax liability sit with, and how is it managed, for the period until sale. Do we start on 1st October as a new trading term and the old owner is responsible for all returns to that date?

Currently it is owned by a single person, and will be bought by my wife to run. we have the option to change the bank into her name or start a new account.

Advise very welcome

Simond

[BoRED S2upid]

Yes is the answer. Would you buy it under a ltd company?

[Simond S]

No, we will keep it as a trading style initially.

It is food so no VAT chargeable, if it grows then we will change to Ltd.

[Al Gorithum]

The responsibility for tax sits with the person/entity making the money, until ownership is transferred, unless there is an alternative clause in the contract of sale.

[StevieBee]

IIRC, all liabilities will pass to you on the date of the transfer of ownership unless those liabilities have been removed from inclusion in the sale as part of negotiations. Not being a ltd company you need to pay attention to what liabilities relate to the operation of the business and the previous owner personally otherwise you could be picking up his tax bill for the year.

£10k a month? Food Sector?.... I'd seriously think about running it as a Ltd company!

Good luck

[Simpo Two]

You'll be taxed on profit not turnover of course.

[DSLiverpool]

Hang on - isn’t this a sole trader as such profit etc is reported on the previous owners tax return.

[BoRED S2upid]

DSLiverpool said:

Hang on - isn’t this a sole trader as such profit etc is reported on the previous owners tax return.

Yes. Solicitors should ensure all debts have been settled.

Well worth considering ltd straight away.