Buying a business with intent to expand - best structure?
Discussion
Am looking to buy a shop, with the eventual goal that I will buy more shops and form a chain. What's the most tax-efficient way to do this? Some will own the freeholds, others won't.
I'm trying to figure out the best way of re-investing profits to buy further shops in a tax-efficient manner though I'm not exactly sure how large chains structure themselves, does each shop count as a separate company?
All advice appreciated.
I'm trying to figure out the best way of re-investing profits to buy further shops in a tax-efficient manner though I'm not exactly sure how large chains structure themselves, does each shop count as a separate company?
All advice appreciated.
CIS121 said:
If this works you simply employ an accountant. If you get to a point where you're openeing up multiple shops, the small fees will be chicken feed.
To be honest, I'd have an accountnat if I was you even with only one shop.
Good luck!
Indeed.To be honest, I'd have an accountnat if I was you even with only one shop.
Good luck!
Cross the bridge of how you can compete with the nations top retaillers when you have at least one profitable shop. There are thousands of people who never even get that far...
If it comes to the stage where you will be buying more shops up and spending hundreds of thousands, the accountant to best organise that structure will cost a small fraction of that.
I do have an accountant, its just I feel a bit silly asking him something that is just a dream at the moment. Can anyone give me a basic idea of what's involved though? Won't be a franchise, the nature of the business is in its own market...
Also i won't be opening new shops, more taking over existing ones. So how do aquisitions work?
Also i won't be opening new shops, more taking over existing ones. So how do aquisitions work?
Edited by Seany88 on Wednesday 16th January 13:18
Eric Mc said:
You can't have much confidence in an accountant if you're embarrased to talk to him/her about your future business plans. I'd talk to my accountant before I did anything.
Very possibly, though as i'm new to all this I don't know what I should really expect from an accountant!?I thought he might give me a ring or drop me a letter stating what dates are important, maybe have an initial look at my accounts to make sure that I am doing things right as it'll be less work for them then at end of year...I don't even really know if what i'm doing is correct or not. Anyone care to explain what I'm paying for?
Eric Mc said:
What is your business at the moment?
Are you a limited company?
Have you completed a set of accounts yet?
Is your 2006/07 Self Assessment sorted (the dealine for filing is two weeks away).
I'm a pharmacist and am currently working as a locum under a ltd co but have seen a pharmacy that i'd like to purchase. I haven't completed any accounts yet, only inc. in aug07. I was told a self-assessment was not required as I had not been sent one and therefore HMRC deemed it unnecessary?Are you a limited company?
Have you completed a set of accounts yet?
Is your 2006/07 Self Assessment sorted (the dealine for filing is two weeks away).
I will not be starting new pharmacies and only buying 'good' businesses (as determined from their books) which may seem obvious, but just trying to understand how larger chains structure themselves and maximise their ability to re-invest profits if taking a minimal salary.
As you are now a director of a limited company I would suggest that you will definitely need to complete a Self Assessment tax return form. Since you incorporated the company in July 2007, the first year you will need to complete a personal Self Assessment form will be for tax year 2007/08.
I would suggest you contact the Revenue after April 2008 to let them know you will need to complete a Self Asasessment form.
The legal responsibility for notifying the Revenue rests with you. Just becasue they fail to send one to you cannot be used as an argument if they later find that you should have been completing Self Assessment returns.
I would suggest you contact the Revenue after April 2008 to let them know you will need to complete a Self Asasessment form.
The legal responsibility for notifying the Revenue rests with you. Just becasue they fail to send one to you cannot be used as an argument if they later find that you should have been completing Self Assessment returns.
Eric Mc said:
As you are now a director of a limited company I would suggest that you will definitely need to complete a Self Assessment tax return form. Since you incorporated the company in July 2007, the first year you will need to complete a personal Self Assessment form will be for tax year 2007/08.
I would suggest you contact the Revenue after April 2008 to let them know you will need to complete a Self Asasessment form.
The legal responsibility for notifying the Revenue rests with you. Just becasue they fail to send one to you cannot be used as an argument if they later find that you should have been completing Self Assessment returns.
Yes sorry that's what I meant - no need to do one for this year.I would suggest you contact the Revenue after April 2008 to let them know you will need to complete a Self Asasessment form.
The legal responsibility for notifying the Revenue rests with you. Just becasue they fail to send one to you cannot be used as an argument if they later find that you should have been completing Self Assessment returns.
Further to this, is it possible to slowly buy the business over a few years? As in the vendor slowly selling shares to me up to their maximum CGT allowance each year? As this way they potentially would not need to pay CGT on the sale of the business? What are the implications of this? I'm sure it must be more complex, but it seems like a good option?
Seany88 said:
Further to this, is it possible to slowly buy the business over a few years? As in the vendor slowly selling shares to me up to their maximum CGT allowance each year? As this way they potentially would not need to pay CGT on the sale of the business? What are the implications of this? I'm sure it must be more complex, but it seems like a good option?
Maybe a good option for him, but a minefield for you.For example, you seem to have ambitions and want to expand. What if next year or the year after the guy decides not to want to continue with your gentleman's agreement to sell bit by bit. Of course, if the company is a nice little earner and he still has a significant share despite all the work and sacrifice you are putting in, he might want back in again! It would be silly not to!
If these negotiations were to break down it might take months or years to sort out at a hell of a cost. You need a nice clean break so you know what you have and what you are in control of.
Eric Mc said:
What is your business at the moment?
Are you a limited company?
Have you completed a set of accounts yet?
Is your 2006/07 Self Assessment sorted (the dealine for filing is two weeks away).
I thought the deadline was Sept 07 for 06/07 SA - what's all this about then? Have I missed something?Are you a limited company?
Have you completed a set of accounts yet?
Is your 2006/07 Self Assessment sorted (the dealine for filing is two weeks away).
JustinP1 said:
Seany88 said:
Further to this, is it possible to slowly buy the business over a few years? As in the vendor slowly selling shares to me up to their maximum CGT allowance each year? As this way they potentially would not need to pay CGT on the sale of the business? What are the implications of this? I'm sure it must be more complex, but it seems like a good option?
Maybe a good option for him, but a minefield for you.For example, you seem to have ambitions and want to expand. What if next year or the year after the guy decides not to want to continue with your gentleman's agreement to sell bit by bit. Of course, if the company is a nice little earner and he still has a significant share despite all the work and sacrifice you are putting in, he might want back in again! It would be silly not to!
If these negotiations were to break down it might take months or years to sort out at a hell of a cost. You need a nice clean break so you know what you have and what you are in control of.
Eric couldn't it be viewed that he was slowly moving himself away from the business, slowly retiring and therefore gradually increasing the responsibility which is reflected by an increasing stake in the business? I would be happy for him to stay a shareholder as it would provide a good income for him come retirement.
schueymcfee said:
Eric Mc said:
What is your business at the moment?
Are you a limited company?
Have you completed a set of accounts yet?
Is your 2006/07 Self Assessment sorted (the dealine for filing is two weeks away).
I thought the deadline was Sept 07 for 06/07 SA - what's all this about then? Have I missed something?Are you a limited company?
Have you completed a set of accounts yet?
Is your 2006/07 Self Assessment sorted (the dealine for filing is two weeks away).
If you wanted the Revenue to calculate the tax liability for you - 30 September 2007
If you are calculating the liability yourself (i.e. Self Assessing - 31 January 2008.
The September and January filing dates have been in place since the first year of Self Assessment (1995/96)
New dates come into play for the 2007/08 tax returns:
If you want the Revenue to calculate the tax liability for you - 30 September 2008
If you want to file your return using a normal paper return - 31 October 2008
If you are filing on line and Self Assessing - 31 January 2009
If you try to submit a paper return after 31 October, it will be sent back by the Revenue. If you want to file on-line, you must get yourself registered and set up with pin numbers and access codes well in advance of 31 January.
Hope that clarifies matters.
Eric Mc said:
Nothing to stop you arguing that. Whether you could convince the tax man is another matter.
Why is nothing straightforward!? Is the problem related to CGT in that if he uses his maximum allowance every year for 5yrs then they'll treat it as one transaction and so for ~£50k shares sold they'll take only 1yrs allowance and then tax him on the remaining £40k?Gassing Station | Business | Top of Page | What's New | My Stuff