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Sole Trader with an IVA

  • 1 post
  • # 77310

This is quite a complex post and I would appreciate any advice please! I have made mistakes in the last year and I'm trying to learn from these and get myself more organised. I've tried to explain my situation as best as possible but please let me know if I have left out anything you need to know.

I started a business in June 2010 as a sole trader.
I funded the set up of the business with personal savings, about two months after this my partner found out he was being made redundant. I took out a personal loan at this time as the business was new and I wasn't able to draw much from it at this point. The loan was used for a mixture of personal expenses and business ones.

The business continued to grow but my partner could not find another job so our income was significantly reduced. For the next few months we basically lived off the credit cards, everything was put onto the credit card (including business expenses).When it got to the beginning of this year I realised what a mess was in, the debt I had accrued had got to such a level that I could no longer afford to keep up with repayments. I decided to seek advice and found that an  IVA would be the best option for me and this was approved in August of this year.

I am now in a position where I am preparing my accounts for my 10/11 return and I am totally confused. As a number of expenses for the business came from the loan / credit cards that are now within the IVA. How do I account for these expenses? I haven't been at all good at keeping records and am in such a mess with everything!! I have an accountant but I am embarrased to admit the situation I am in without having a little further understanding first.

Any advice will be greatly appreciated, thanks for reading.

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Stardoe
  • Member PM.Dip
  • Practice Licence
  • 194 posts
  • # 77437

Hi there,

Sorry to hear about your situation, but I can understand how easy it is to get into a mess with credit cards.  I once worked for a sole trader who got into a similar sort of mess with credit cards and took out an IVA (just before my time I hasten to add!) I'm sure that business and personal expenses were included in it as the arrangement is between the IVA company and the credit card companies, doesn't really matter what was on the credit cards.  Don't forget that as a sole trader, you are the business.

Did you seek any advice from your accountant after you set up the IVA?  Personally I would be inclined to put your cards on the table with your accountant instead of trying to "prepare your accounts" in case you make things worse (no offence meant).  Don't be afraid of going to your accountant and explaining, that's what you pay him for!

Hope things get better for you.

Pauline
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