investing in another company

[stacks]

Lets say I've got 20K profit sitting in my Ltd Comp account. I'm also in the process of setting up a new completely different business and there are obviously startup costs involved in that. Can I invest my current limited companies money in setting up the new one?

Whats the best way of doing this???

[stacks]

so has no one been in this position before? I'm sure loads of you have plan B's on the go which need funding.

[vincent_kennedy]

I can't help you, but am in the same position myself. My mrs is setting up her own company - nothing to do with contracting and I'd like to invest in that.

I would think that there would be two ways for company A to invest in company B-

1. Loan company B the money. In which case a realistic rate of interest would have to be be paid from B to A, and any profit that A makes would be subject to tax in the usual way.

2. Buy a part of company B - but then when company B starts making money then A would obviously have to start paying tax on the profit from it's investment.

That's my very simple expectations, but would be grateful if anybody can help us out with better information.

[jayzeer]

I am also looking into this. Have been advised by my accountant that I cannot invest in the other company unless there is likely to be an income to the loaning company.

Otherwise it gets complicated because you are giving a loan.