One Business - should I split it into 2 ?

signman_2

I have one business which does 2 trades, these are not associated so I was thinking about breaking these into their own seperate business to save some tax and allow me to make the most on capital allowances.

Is this a good idea or is there really little point?

Any advise please..

Thanks

Pennywise

signman wrote: »

I have one business which does 2 trades, these are not associated so I was thinking about breaking these into their own seperate business to save some tax and allow me to make the most on capital allowances.

Is this a good idea or is there really little point?

Any advise please..

Thanks

Do you really want to have to keep two separate bank accounts, two lots of book-keeping, two lots of annual accounts etc? How easy could you split them - two different till receipts from the post office (one for each) - separate telephone lines or itemised bills and recharges from one to another? What about anything shared - a separate admin computer for each business or does one business own it and recharge the other for use, etc. A real can of worms. I don't even think it would work as they'd probably be "associated" for cap allowances rules, so the thresholds etc would be shared between the businesses rather than being doubled up. This isn't a new idea - it constantly crops up, but others have thought about and the tax inspectors have closed any loopholes and over many years have a wide array of powers for dealing with artifical business separation, "associated" businesses (i.e. those owned by spouses or close family) etc.

To make it work, they'd need to be completely separate businesses, different customers/suppliers, different premises, capable of being operated independently of eachother and in different ownership. For the ownership point, you could have one a sole trader and the other a ltd co., or one a sole trader and the other a partnership. Having both a sole traders wouldn't give you two separate businesses for tax rules.

signman_2

Hmmm, lots more I guess so maybe not that simple or of major benefit..

Thanks for reply

moneypooh

In this climate if one does look more profitable maybe a split would be good. I know someone in your shoes has just split the businesses and this is to protect the better of the two. One may need to close if trade doesn't pick up but the other totally unassociated is doing well. They didn't want the poorer business to be supported by the other. Closing one smaller one would be better than loosing everything.

I'm sorry if this isn't relevant in your case - just a thought though.