Plan B - setup another company???

[techno]

Hi

I run all my contracts through my own LTD which has been setup in the normal (if this exists) way, i.e. 50/50 split with wife and me as the sole director.

For Plan B I am looking to run a subscription based website and would like advice as to the best approach - is it simply put the revenue through the current LTD or setup a new LTD.

Also if I setup a new LTD is there any benefit to to the two companies being "linked" in anyway either via shares or (years ago) I remember something about associated companies and spreading tax around.

I would talk to my accountant but he has had the audacity to take a holiday, and I will be talking to him when he comes back, but I thought I would get the opinion of the CUK panel.

Thanks.

[chris79]

What advantage do you see in running things through a separate limited?

[techno]

What advantage do you see in running things through a separate limited?

Simply to keep the two seperate for my simple mind....so have I just answered my own question??

[cykophysh39]

Well that entirely depeneds.

I don't see any real tax advantage of running two companies.
There would be no real advantage to yourself as a director of 2 companies,
as you personally will still only be able to take 38k a year at 20%.

You would still need to pay the administration fees etc for the two companies. etc so essentially doubling the cost.

The only obvious benefit of having two companies is that if one sinks the other can still float.

As for tax and being able to distribute profits etc. There are no real benefits.

[KackAttack]

One reason to run separate companies might be if you run the Flat Rate Tax scheme for your existing company, this might not be applicable/suitable for your Plan B.

[Money Money Money]

[QUOTE=techno;612417]Hi

I run all my contracts through my own LTD which has been setup in the normal (if this exists) way, i.e. 50/50 split with wife and me as the sole director.

Secton 660?

[chris79]

[QUOTE=Money Money Money;612495]

Hi

I run all my contracts through my own LTD which has been setup in the normal (if this exists) way, i.e. 50/50 split with wife and me as the sole director.

Secton 660?

Quite possibly, although exactly how hard this is being pursued by HMRC is another question since the Artic ruling last year. This will soon be covered under the proposed 'income shifting' rules which are expected to be drafted in soon. I guess it probably looks more dodgy if your wife is 50% shareholder and doesn't work either inside or outside your company (hence using up her tax allowance).

[chris79]

Simply to keep the two seperate for my simple mind....so have I just answered my own question??

Ball on the other foot but having multiple streams of income into the company may help your business look more like a real business to the taxman?

Personally the hassle of running two separate companys as discussed above seems to outweigh any benefit of having things 'separate'.. just means you have twice as much work to do, twice the fees, more hassle on self assessment, etc.. no real tax advantage. If you have good accounting software you can break down sales into groups to see things all separate anyway, something like Sage can do this.

[Nixon Williams]

Also if I setup a new LTD is there any benefit to to the two companies being "linked" in anyway either via shares or (years ago) I remember something about associated companies and spreading tax around.

The lower rate of corporation tax for small companies is at 21% (22% from 01/04/09) on profits upto £300,000 per annum. If you have two companies, this threshold would be reduced to £150K - so this may be an issue depending on how big you expect the profits to be.

Larger companies pay at the rate of 28%, although it would seem that we may see a meeting in the middle for all companies at say 25%, but that is for the future.

Alan

[Zen Contracting]

One reason to run separate companies might be if you run the Flat Rate Tax scheme for your existing company, this might not be applicable/suitable for your Plan B.

Be careful here. If you are planning on not registering company B for VAT then if it shares equipment, premises and staff with company A HMRC may well view the situation as artificial separation and come after company B for VAT.

Regards.

David.