Buying Hotel/Pub - company setup?
Discussion
We are currently looking into buying a pub/hotel.
It would be bought and run between me, my gf and gf parents.
My gf would invest a substantial lump sum.
GF parents would also invest a lump sum.
The remainder would be borrowed, and I would cover the repayments each month out of my salary (i will keep working for a few years).
I was thinking the best way to set the business up is as a Ltd company, with us all as shareholders, taking a small salary each and the remainder as dividends.
Does this sound reasonable? And what would my monthly 'investments' (to cover the commercial mortgage) in the company be considered as?
Thanks
It would be bought and run between me, my gf and gf parents.
My gf would invest a substantial lump sum.
GF parents would also invest a lump sum.
The remainder would be borrowed, and I would cover the repayments each month out of my salary (i will keep working for a few years).
I was thinking the best way to set the business up is as a Ltd company, with us all as shareholders, taking a small salary each and the remainder as dividends.
Does this sound reasonable? And what would my monthly 'investments' (to cover the commercial mortgage) in the company be considered as?
Thanks
You need to take some proper advice from an accountant, go and speak to one it will save you money in the long run. If you get the structure wrong it will cost a lot in wasted tax. Paying loan repayments out of salary may not be necessary and would incur National Insurance that would not be needed.
I think you are saying you will pay the mortgage from your existing salary, not your earnings from the new venture? If so, you could make the payments as a Director's loan and take the money back when the business can afford it.
You may be better looking at alternative ways to structure the set up, so that you can still get your money back if things go bad.
You may be better looking at alternative ways to structure the set up, so that you can still get your money back if things go bad.
david_s said:
I think you are saying you will pay the mortgage from your existing salary, not your earnings from the new venture? If so, you could make the payments as a Director's loan and take the money back when the business can afford it.
You may be better looking at alternative ways to structure the set up, so that you can still get your money back if things go bad.
You may be better looking at alternative ways to structure the set up, so that you can still get your money back if things go bad.
yes, i'd be 'investing' on a monthly basis out of my existing salary.
if it's a loan though, i'm effectively not investing in the business am I?
Correct.
However, making personal loans to a limited company can result in quite complicated disclosure and tax ramifications.
As ever, all parties involved should be totally clued up in their duties and responsibilities as directors/shareholders of a limited company.
A long chat with an accountnat would be high on my list of priorities to ascertain if a limited company was the best way to go forward on this.
In my experience, very few pubs are run and managed as limited companies.
However, making personal loans to a limited company can result in quite complicated disclosure and tax ramifications.
As ever, all parties involved should be totally clued up in their duties and responsibilities as directors/shareholders of a limited company.
A long chat with an accountnat would be high on my list of priorities to ascertain if a limited company was the best way to go forward on this.
In my experience, very few pubs are run and managed as limited companies.
We were advised that the Ltd way wasn't the best at this stage, there are 3 partners in our venture and we are a partnership. Also for a commercial mortgage your lease needs to be a LONG one ie 30 years, ours is 26 and loan was the only way 50/50.
Feel free to PM me if you need to. Took me a while to buy the pub and only completed the process a month or so ago.
Feel free to PM me if you need to. Took me a while to buy the pub and only completed the process a month or so ago.
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