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How does this situation work, sole trader, partnership, limited?

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  • 19-07-2012 8:36pm
    #1
    ByronB
    Banned (with Prison Access) Posts: 85 ✭✭


    If a sole trader has two very small online businesses in the form of two separate websites, and is in the process of opening a third, but due to being extremely busy with things he will be unable to devote enough attention to the third website. So he decides to find a partnership - just to help him with the third one. So 6 months go by and the partnership maybe went well and the website is doing good but the initial sole trader now decides he wants to go limited (form an Ltd company) for whatever personal reasons. Where does this leave the 3rd website??
    It was originally owned by 2 sole traders who formed a partnership and now the first guy has gone limited! Now is it a partnership of a limited company and 1 sole trader? What way might this go?


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    #2
    Axwell
    Moderators, Computer Games Moderators Posts: 10,462 Mod ✭✭✭✭Axwell


    The person doesnt become a limited company..its reflecting the type of business. If the business goes limited then its a ltd company and both people are part of that. One person doesnt just decide to go limited on his own.


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    #3
    ByronB
    Banned (with Prison Access) Posts: 85 ✭✭ByronB


    Axwell wrote: »
    The person doesnt become a limited company..its reflecting the type of business. If the business goes limited then its a ltd company and both people are part of that. One person doesnt just decide to go limited on his own.

    No like you take for example you were a sole trader yourself with a lot going on, so in order for you to develop another website you need to find someone else, but down the road you might decide that you want limited liability (you had this intention before ever building this other website so it's unrelated to the partnership) However, where does that leave the guy who is your business partner on this website? Can he remain a sole trader and now the website is owned by a limited company and sole trader?


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    #4
    smeharg
    Registered Users Posts: 300 ✭✭smeharg


    ByronB wrote: »
    No like you take for example you were a sole trader yourself with a lot going on, so in order for you to develop another website you need to find someone else, but down the road you might decide that you want limited liability (you had this intention before ever building this other website so it's unrelated to the partnership) However, where does that leave the guy who is your business partner on this website? Can he remain a sole trader and now the website is owned by a limited company and sole trader?

    Just because one of the partners incorporated a company doesn't mean his part of the business operated by the partnership is automatically transferred to that company.

    The partnership remains until you both partners agree otherwise.

    There may be capital gains tax implications on transferring a business from a soletrade/partnership to a limited company.


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    #5
    ByronB
    Banned (with Prison Access) Posts: 85 ✭✭ByronB


    smeharg wrote: »
    Just because one of the partners incorporated a company doesn't mean his part of the business operated by the partnership is automatically transferred to that company.

    The partnership remains until you both partners agree otherwise.

    There may be capital gains tax implications on transferring a business from a soletrade/partnership to a limited company.

    Oh really, so after forming the company, he can then "outside of the company" still run this website with his business partner?


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    #6
    smeharg
    Registered Users Posts: 300 ✭✭smeharg


    ByronB wrote: »

    Oh really, so after forming the company, he can then "outside of the company" still run this website with his business partner?

    Correct.

    The company is a separate legal entity. Think of it as the company being another person.


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    #7
    derv60
    Registered Users Posts: 56 ✭✭derv60


    What are the additional sources of finance for a private limited company v
    a sole trader.


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