Using existing Ltd company for new venture

[donaldduke]

I have some reserves in my contracting Ltd and want to quit IT and start a new venture (not related to IT), using my existing Ltd if possible.

Anyone know the issues around this.

Is it legit to do this, or do HMRC et al, expect you to shutdown and start a new Ltd.

Shuting down the existing company costs about 250 and creating a new one costs 150. Then there is tax to pay on extracting the reserves not to mention the hassle of bank account opening.

[checkmate]

can we buy existing limited companies? and then rename it? whsats quicker and easier? i am hoping to set up my own limited company up soon

[DaveB]

No real problems with doing it, although if you are on the VAT FRS you may need to change your registration to reflect the new flat rate based on the new business.

The trouble starts when you try and run two different businesses through the same company. Always better to keep them seperate.

[el duder]

No real problems with doing it, although if you are on the VAT FRS you may need to change your registration to reflect the new flat rate based on the new business.

The trouble starts when you try and run two different businesses through the same company. Always better to keep them seperate.

Err why?

I run both my business through my LTD with no problems at all.

I look at the accounts as money in and money out. i.e SALES.

Dont matter where it comes from.

[donaldduke]

No real problems with doing it, although if you are on the VAT FRS you may need to change your registration to reflect the new flat rate based on the new business.

The trouble starts when you try and run two different businesses through the same company. Always better to keep them seperate.

Thanks for the info. I havent billed through my Ltd in two years anyway (been using an Umbrella), so i dont think this will an issue for me.

Will talk to my accountant..

[TheFaQQer]

Err why?

I run both my business through my LTD with no problems at all.

I look at the accounts as money in and money out. i.e SALES.

Dont matter where it comes from.

Ditto.

There might be an issue if you are on FRS about justifying which rate you are on - my two businesses are completely different but it choosing the VAT rate was fairly easy since there is a big difference in the size of the income stream.

[DaveB]

The problems arise when one business starts losing money. Since the OP said he was getting out of IT there is a good chance that plan B may involve expenditure as well as income. If the Plan B loses a large chunk of money the the Ltd. Co. profits will be reduced which means lower dividends despite the fact that the other business is doing well.

Running at a loss is not unusual during start up of a new business so by keeping them seperate you can maintain your income from the original business even though the new one is running at a, hopefully temporary, loss.

If things go badly wrong you can wind up the failed business without the original being liable for the losses and protect your income.

Having said all that since the Ltd. in question hasnt been trading for a while it doesnt really matter in this case.

[TheFaQQer]

The problems arise when one business starts losing money. Since the OP said he was getting out of IT there is a good chance that plan B may involve expenditure as well as income. If the Plan B loses a large chunk of money the the Ltd. Co. profits will be reduced which means lower dividends despite the fact that the other business is doing well.

Running at a loss is not unusual during start up of a new business so by keeping them seperate you can maintain your income from the original business even though the new one is running at a, hopefully temporary, loss.

If things go badly wrong you can wind up the failed business without the original being liable for the losses and protect your income.

Having said all that since the Ltd. in question hasnt been trading for a while it doesnt really matter in this case.

That's EXACTLY why I run my two businesses in one place. The IT side should be making money, and will offset the losses that the other one makes. Gut feeling says that the other one will never make a profit, but as long as I can take the hit from the IT income, I'm happy with it this way.

Rather do that than not at all, and have to take the losses from the other company from my post-tax income as a "pet project"

[el duder]

That's EXACTLY why I run my two businesses in one place. The IT side should be making money, and will offset the losses that the other one makes. Gut feeling says that the other one will never make a profit, but as long as I can take the hit from the IT income, I'm happy with it this way.

Rather do that than not at all, and have to take the losses from the other company from my post-tax income as a "pet project"

Same Same.

I fund my Plan B with IT work. Until one day hopefully Plan B becomes Plan A