Linking LTD Companies.
Discussion
Hi,
Just a quick one, I wan't to use the profits of one company I own to fund the startup of another one, I also own.
Whats the most financially effective way of doing this? Is it loans from one company to the other or is it possible to just declare the 2nd company part of the first even though the business is different and pay for expenses like that?
Many thanks,
John.
Just a quick one, I wan't to use the profits of one company I own to fund the startup of another one, I also own.
Whats the most financially effective way of doing this? Is it loans from one company to the other or is it possible to just declare the 2nd company part of the first even though the business is different and pay for expenses like that?
Many thanks,
John.
John
I suspect there are almost an unlimited (no pun intended) number of ways of doing this.
I have in the past spun off a second Ltd company of which one of the shareholders was the first Ltd company, and it made a significant loan to the 2nd company. We also charged back management time to the first company to simplify salary (PAYE/Employers NI) arrangements (though that needs to be checked out with your accountant (or EricMC!) as to how to do it with current IR rules)
In the end the 2nd company became bigger, I came out of the 1st company by selling my stake in it and buying the 1st comapanies stake in the second company (gets confusing) and the loan was repaid.
You could of course make the 2nd company a wholey owned subsiduary of the first, but I suspect you need to think about your involvement long term with each company and go and talk to your accountant.
davidy
I suspect there are almost an unlimited (no pun intended) number of ways of doing this.
I have in the past spun off a second Ltd company of which one of the shareholders was the first Ltd company, and it made a significant loan to the 2nd company. We also charged back management time to the first company to simplify salary (PAYE/Employers NI) arrangements (though that needs to be checked out with your accountant (or EricMC!) as to how to do it with current IR rules)
In the end the 2nd company became bigger, I came out of the 1st company by selling my stake in it and buying the 1st comapanies stake in the second company (gets confusing) and the loan was repaid.
You could of course make the 2nd company a wholey owned subsiduary of the first, but I suspect you need to think about your involvement long term with each company and go and talk to your accountant.
davidy
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