Transferring funds between two businesses?

[Jamster123]

The initial message was deleted from this topic on 13 August 2015 at 21:17

[Jasandjules]

Hopefully an accountant will be along shortly but I would assume you pay yourself a dividend from one and lend it to the other (as another directors loan).

[MrDan]

I did this recently, from my IT company to a new Ltd company for my Pub, basically start up cash.

I did it as a loan so it sat on the balance sheet on both companies, now each month pub pays its debts back as a interest free loan.

not sure if its the best way to do it but my accountant didn't have an issue, if the pub were to have failed though I would have still had to pay Corp tax on that money I imagine.

[Alpinestars]

Assuming there is not a parent/subsidary relationship such that a dividend could not be paid, a loan is fine. Assuming the companies are "small", it can be interest bearing or interest free.

[Eric Mc]

And the relationship between the two companies will need to be disclosed in the accounts of each company - including details of any inter company loans and their conditions.

[andyb28]

Could one charge the other rent?

[PompeyPaul]

I did this recently between two companies as a loan and was fine.

[Eric Mc]

There are no specific laws against this but, as I have said, there IS law which states that the existence of the loan, nature of the loan, the extent of the loan and the terms of the loan need to be disclosed in the notes to the accounts of both companies.

And, if for any reason the loan is not repaid or is written off, then there will be tax implications.

[s2kjock]

As an aside, the accounting for certain types of inter-company loans (those not repayable on demand or not charging a market rate of interest) is also going to get a bit complicated over the next few years for larger companies.