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The initial changes required to change the client from one business type to the other will usually be carried out in Accounts Production when the accounts are prepared.
When changing a Sole trader into a Partnership carry out the following steps:
Change the business type from sole trader to partnership by going to Client | View and changing the Business Type on the Basic tab. Click "Yes" when asked to confirm that the change is required.
Add the new partner(s) to the client via Edit | Partners.
Set up the partnership profit shares by selecting Edit | Partners Profit Shares. Remember that at least two different sharing ratios will need to be set up:
for the original trader who will receive 100% of the profit for the period before the partner(s) joined
from the date the new partner joined splitting the profit between all the partners.
When changing a Partnership to Sole trader carry out the following steps:
enter an end date must be entered for each resigning/deceased partner via Edit | Partners, highlight the ceasing partner and click on View, then enter the relevant end date, and click Update.
as soon as there is only 1 active partner, the system will assume that it is a Sole trader. It will then display the Partner share of net profit screen, where the profit share should be set as 100% being received by the remaining partner.
If any of the ceasing partners have a capital account balance, this should be cleared to £0 in the year they have ceased, as they are no longer a partner. Usually the balance would be transferred to an other debtor, or other creditor account, but this is up to the individual.
Do not change the business type to sole trader. Changing the business type to sole trader will mean that partnership returns for earlier periods can not be easily regenerated. As the IRIS software can detect that there is only one remaining involvement it will automatically treat the business as a trader once the other partners have left.