Which Business Structure to go for?

[PinkPanther]

I am looking to form a 3-way consortium with two business friends who currently have one Limited company between them (both having equal shares in the company). This is currently set up as a Limited company with one division at the moment - Let's say 'ABC Projects Ltd' trading as DEF Products.

The reason they have done this is that they were looking to build up a portfolio of businesses and each of these would in effect be a division of 'ABC Projects Ltd.'

The three of us are now in the early stages of buying one business (a sole proprietor) and have seen another (a Partnership) which is now a distinct possibility. We were looking to make these divisions of ABC Projects Ltd and then restructure the share percentage accordingly (as I will become a shareholder/director).

However we are now unsure if the 'One Company with trade divisions' is the best business vehicle to adopt as we would be looking to sell/trade some or all of the companies in the future. We were wondering whether it would be best to have each businesses a Limited Company in their own right (none of the companies are related in trade or function anyway) or perhaps even make the ABC Projects Ltd a holding company and the other businesses Limited subsidiaries.

I know I need to speak with a Corporate Tax Advisor and my/our accountant/s, but I like to go pre-armed

Any ideas, advice or guidance?

P.S. If you have a Company with trade divisions, I understand that you have one VAT number, one Registered Number, and one set of company accounts to submit to the Inland Revenue, but can you have separate bank accounts for each division?

[Eric Mc]

You might have one limited company but as the trading arms are all dissimilar, you might find that you would need to prepare sepatae P & L accounts for each trading activity. The Revenue do not normally allow losses in one trading activity to be offset against a differnt trading activity - unless the operation is run as a proper "group". In that case, a holding company witrh trading subsidiaries might be the way to run such an operation.

[PinkPanther]

Thanks Eric

My tendency is towards the 'holding company' vehicle as this seems to give us a little more freedom with regards to tax issues and also more options (as I understand it) in selling a subsidiary company.

BTW with the amount of 'free' advice you give on here, surely you need to begin charging

[srebbe64]

I would definitely opt for the holding company owning the subsidiaries. It's cleaner and, potentially, more Tax efficient when you come to sell - you can either sell the group or individual subsidiaries.