Going Limited Company.

[Col555]

We're toying with the idea of taking our sole trading family business to been a Limited Company. Just wondered what the thoughts of the forum are regarding the change. Interested to hear about advantages, disadvantages, regrets, lessons learnt etc.
we're on a rented farm, with 2 seperate owned family homes locally. Does been a tenant present different advantages, disadvantages to if we were a owner occupier?

 

[Dealer]

Depends on your reason for change

It may affect your banking arrangements (if you have any)

Strongly recomend leaving the properties out of the company (you may have to use them as securtiy for the bank but can be done)

A bit more to do for accounting but not much more than currently doing

Everyone will see you accounts via companies house

Ltd will mke it easyer to bring people in and out of the business via shares

some tax differnces

I am ltd in my business

 

[Col555]

What appeals to me personally is the ability to protect our non farm assets, the houses, should anything ever crop up that meant we were been sued, or claimed against. Dad says we have insurance for that, but the way I see it insurance companys will squirm every way it can to avoid a payout, and shift blame and cost to us.

Profit taxation is another reason that were looking into it despite the extra paper work, but this is where I welcome the experience of the forum to advise me on the options.

 

[Pheasant Surprise]

The limited liability aspect is good, just be wary with the banks, depending on whether you need credit and if so how much, if they ask you to sign an indemnity or guarantee then as a director of the company you become personally liable for any outstanding debt with that bank or financial institution.

 

[joe soapy]

It will add costs, which may be offset by tax benifits.
shareholders or directors dont seem to have the same liabilities as partners.
Easy to sett up but more difficult to exit

 

[JNP]

Do it. It wont cost much to set up and you will pay slightly more to your accountant as there are extra box ticking exercises but you should clear these costs easily if your in the higher tax bracket. Keep your houses out of it.

You will be protected for liability and debt but some backs will want personal guarantee on loans etc so you would still be liable.

What is it you do?

 

[Lincsman]

Dont forget in a loss year where you would pay no tax now you will still end up paying tax on your "pay"

 

[Walterp]

I'd say that your Dad is right - it's not worth the hassle.

Hassle? Extra accountancy costs (go out and cost these to see...), extra tax charges in kind on vehicles (on farmhouse, too?) and the problems of shares on entry, exit and keeping co. records.

I'd struggle to see why any farming business (as opposed to a non-farming trader) would bother with it, unless the scale and parties involved made it become more attractive. Even then, valuable capital tax benefits have in the past been lost by incorporation. The possibility that there'd be less tax to pay would be offset by the complete loss of flexibility.

 

[beltbreaker]

Once you are a ltd company it is pretty hard do deincorporate. According to my accountant there is a tax cycle, where it swings between being more of a benefit to be a sole trader or partnership and more to the ltd company.

We looked at becoming a partnership recently and costs were prohibative, having being a limited company for over 50 years. As Walter says tax on kind on vehicles and the house do add. It does give protection if things go tits up as it would only be the business not the assets outside the company. If you are sailing close to the wind it may help for piece of mind as this is why we did it all those years ago giving the farm a chance to restructure and prosper.

Cheers BB

 

[Dealer]

You can have both set up ltd trading company and keep assets in trading partnership and charge ltd co a management charge to make the best use of tax laws

as for costs accountancy costs circa £1500 pa plus you normal monthly admin (costs to set up circa £100) i did mine online takes 40 mins.

no tax to pay upfront for ltd co

ltd co and personal tax dates can be different

you can take Circa 10K in dividends and no NI to pay

"Once you are a ltd company it is pretty hard do deincorporate" its not that difficult to wind up a ltd co. and start a partnership if all shareholders are in agreement

the main advantages I see in farming is in the event of divorce Share holders will only have the value of there shares / the company nett worth

seen many long standing farming families having to borrow to by the farm back to pay an outsider a divorce settlement.

 

[DairyGrazing]

What are the sfp repercussions?

 

[Derrick Hughes]

What are the sfp repercussions?

You may be better keeping the parnership running alongside the Ltd company as you won't want or need to many asstets in the company just enough to cover any borrowings

 

[Blue.]

You may be better keeping the parnership running alongside the Ltd company as you won't want or need to many asstets in the company just enough to cover any borrowings

An idea put to me by my accountant about my business.

if you run a partnership and a ltd company would you not get to use capital tax allowance in either business?

Would be handy if you had a big project on.

 

[Dragon]

An idea put to me by my accountant about my business.

if you run a partnership and a ltd company would you not get to use capital tax allowance in either business?

Would be handy if you had a big project on.

yes you can have two lots of investment allowance. but the businesses would need a clear sparation for accounting

 

[Derrick Hughes]

The idea being to have the best of both worlds ,you need a clever accountant

 

[grumpy]

I like the folks who accrue a large debt then declare bankruptcy then start another Ltd company in the wife's name

 

[Dealer]

So partners in a partnership declared bankrupt and start again is alright then i take it.

Some businesses fail fact

If people only ever had one chance how many new busineses would be formed.

Then there are always the crooks that will find away around any situation with no morals..

If Going ltd is right for your situation go for it like every choice you make in business do it for the right reasons

 

[Mdt]

I like the folks who accrue a large debt then declare bankruptcy then start another Ltd company in the wife's name

It wants stamping on their foreheads "bankrupt" they shouldnt be allowed to carry on like. Know of a local idiot who has now setup his 3rd business after two failures! He took genuine businesses down with him and he drives round in flash cars!

 

[grumpy]

I have no problem with folks failing in business and starting again good on them I say.its the escaping debt and bringing other businesses down I find abhorrent and said individuals should be publicly flogged

 

[Dragon]

I have no problem with folks failing in business and starting again good on them I say.its the escaping debt and bringing other businesses down I find abhorrent and said individuals should be publicly flogged

Is IT correct that in france if you become insolvent then you may face a jail term.