2 different businesses...one limited company?
Discussion
Running two seprarate companies might make the control and management of the two separate trading activities easier in that all their affairs are kept separate and there is less chance of confusion between the two. However, running two separate companies is probably more than twice as complicated as running just one - from a bureaucratic and admin point of view.
Regarding losses - the Revenue would look on the two trading activities as separate and distinct. If the businesses were running in two separate companies, any losses incurred in one of the companies could only be available for utilisation in that particular company. There is no (legal) mechanism for offsetting losses incurred by Company A against profits in Company B.
The situation with only one company running both trades is a bit more complicated.
If Trade A makes a loss and Trade B makes a profit, the loss of Trade A CAN be offset against the profit of Trade B but ONLY IN THE YEAR THE LOSS WAS INCURRED. If the directors decide not to offset the loss in that year, the loss can then only be carried forward to future years for offset against the PROFITS INCURRED FROM TRADE A.
Regarding losses - the Revenue would look on the two trading activities as separate and distinct. If the businesses were running in two separate companies, any losses incurred in one of the companies could only be available for utilisation in that particular company. There is no (legal) mechanism for offsetting losses incurred by Company A against profits in Company B.
The situation with only one company running both trades is a bit more complicated.
If Trade A makes a loss and Trade B makes a profit, the loss of Trade A CAN be offset against the profit of Trade B but ONLY IN THE YEAR THE LOSS WAS INCURRED. If the directors decide not to offset the loss in that year, the loss can then only be carried forward to future years for offset against the PROFITS INCURRED FROM TRADE A.
For smaller operations it is probably the best option. However, you must instigate some accounting and book-keeping system that allows you to see how the two sepratae activities are performing.
It is very easy to muddle up transactions between the two operations and then begin to lose sight as to whether either activity is profitable or not.
Talk to your accountant.
It is very easy to muddle up transactions between the two operations and then begin to lose sight as to whether either activity is profitable or not.
Talk to your accountant.
Strangely enough, I am now doing a limited company that has two operations.
Book-keeping and building.
It's not too much of a problem, as 'obviously' the book-keeping is not too bad (although no where near perfect condsidering they're book-keepers!)
Eric is spot on though, differentiating how both are doing has been the main problem, and it's certainly worth getting the books right in this respect, so you can keep a close eye on what's happening with each trade.
Book-keeping and building.
It's not too much of a problem, as 'obviously' the book-keeping is not too bad (although no where near perfect condsidering they're book-keepers!)
Eric is spot on though, differentiating how both are doing has been the main problem, and it's certainly worth getting the books right in this respect, so you can keep a close eye on what's happening with each trade.
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