Limited Company

pvcprinting · #1 14-02-2009, 03:13 PM

I understand it may depend onyour business set up as to if/how you would start up as a limited company

We are a limited company with 2 very diverse businesses.

Each Director holds 1 share each with 1 director being full time employed 'out of the business' and 1 director not drawing a salary (as yet) from the limited company

I have a number of questions and will post them in due time

Q1. What exactly are the shares value and is 1 share each the best option for the company to maximise tax breaks

Peter W · #2 14-02-2009, 03:17 PM

Quote:

Originally Posted by pvcprinting

Q1. What exactly are the shares value...

Impossible to even guess without knowing a lot more about the businesses. What sort of profits are being made, and what assets and liabilities are there in the company?

Quote:

Originally Posted by pvcprinting

... and is 1 share each the best option for the company to maximise tax breaks

It does not really matter about the number of shares, if you want to split the company 50/50.

If one of you has a much higher income from outside the company, then there may be some tax advantage in that person owning less than 50% of the company so they can avoid higher rate tax on dividends.

pvcprinting · #3 14-02-2009, 03:19 PM

Can more shares be issued and if so how is that done

Peter W · #4 14-02-2009, 03:25 PM

As an exercise in company procedures, it is not difficult. You need to check your articles of association to see whether there are any restrictions.

There are some tax pitfalls that are a lot more complicated. Are the shares being issued at an undervalue to an employee? Are you artificially diverting income to one of the shareholders, which is not commensurate with their level of investment and work in the company?

pvcprinting · #5 14-02-2009, 03:36 PM

1 Director works fulltime for the company (not currently drawing a salary)
1 Director works full time out of the business with a salary >£32k and works part time for company

Also appreciate that we need to ensure the class 2 NI contributions are maintained whilst not drawing a salary from the company

Peter W · #6 14-02-2009, 03:43 PM

The shareholdings are more important than the appointed directors.

Class 2 NI is paid by the self-employed. You would not be paying these if you have a limited company.

Why is the full-time director not drawing a salary?

pvcprinting · #7 14-02-2009, 03:51 PM

Full time director not drawing salary asprofits are being ploghed back into the business

Peter W · #8 14-02-2009, 04:01 PM

It is usually tax-efficient to be drawing a minimal salary, of say £6,000 per year, if the person has little other income.

That money can then be lent back to the company, if required.

Limited Company

Accounts, Finance and Tax Affairs