Limited companies for dummies

[j6891]

What are the pros/cons compared to current farming partnership (with parents).
Do you put all assets into company or keep separate ownership?
I have off farm income of about £18k how would this be affected?
Presume the more you make the more beneficial ltd companies are but what are the tipping points money wise?
I presume taking a dividend is the best way of taking money out? Any benefits of taking all/nothing per year?
Any advice appreciated. Tia

 

[lazy farmer]

We now have one. The taxes saved are large in our case. Much as above really. Profits are moved around to suit all partners and to reduce tax. Our accountant normally would provide 3 options. Normally go for the middle one as the tax paid in terms of percentages is absolutely tiny on the most aggressive. I take profits as dividends. The structures that work best are generally those in my opinion that have partners who don’t mind how on paper the profits are divided.

 

[Clive]

What are the pros/cons compared to current farming partnership (with parents).
Do you put all assets into company or keep separate ownership?
I have off farm income of about £18k how would this be affected?
Presume the more you make the more beneficial ltd companies are but what are the tipping points money wise?
I presume taking a dividend is the best way of taking money out? Any benefits of taking all/nothing per year?
Any advice appreciated. Tia

pro is corporation tax which is lower than income tax especially if you are a higher rate payer and your liability is limited protecting your personal assets if things go wrong. You also get access to stuff like R&D tax claims etc which a partnership can’t

con is getting anything out of the business- dividends or salary you will pay tax then, dividends used to be more tax efficient than income tax but that’s no longer the case really. Running cars through a limited is also much more expensive than n a partnership enjoys

generally speaking partnership is better if you are unlikely to go bust snd have assets that would get “trapped ” in a limited

a limited also protects you from stupidity of other partners in a business - I would never go into partnership with anyone other than my parents who i can trust 110%

best to take professional advice- every corcumstance is different!!

 

[Lincsman]

And LTD means we can all pay £5 to see your accounts in detail and how you are doing!

 

[teslacoils]

There is absolutely no reason why you can't run a ltd alongside a sole trader / partnership. That also gives you the simplest way of getting the money "out".

 

[Suffolk Serf]

Another "con" is that anyone, including your landlord, can look at a Ltd company's accounts online.
Further to above- it's all free on Companies House website- no need to part with a fiver

 

[Suffolk Serf]

There is absolutely no reason why you can't run a ltd alongside a sole trader / partnership. That also gives you the simplest way of getting the money "out".

That's what I do but an Unlimited company, which no one can see that accounts of.

 

[Lincsman]

Another "con" is that anyone, including your landlord, can look at a Ltd company's accounts online.
Further to above- it's all free on Companies House website- no need to part with a fiver

Depends on the detail and how up to date required

 

[Clive]

Another "con" is that anyone, including your landlord, can look at a Ltd company's accounts online.
Further to above- it's all free on Companies House website- no need to part with a fiver

you can’t really tell a lot about a company from micro accounts on CH

 

[Suffolk Serf]

you can’t really tell a lot about a company from micro accounts on CH

Larger companies have to post much more detailed accounts.

 

[Clive]

Larger companies have to post much more detailed accounts.

has to be quite a big company before you have to file full accounts

the micro accounts are pretty meaningless

 

[MrNoo]

And LTD means we can all pay £5 to see your accounts in detail and how you are doing!

You dont even need to do that, the BETA version is free although maybe not in such great detail. I had someone telling me how their son was turning over £100k/yr and how wonderful he was. Quick click online and truth is there in B&W, £10k/yr

 

[Clive]

just looked and its lower than i thought at just £632k turnover

 

[ollie989898]

Seek professional advice. Companies don't die- may have an influence on a tenancy for example if your landlord has stated it is for life etc.

You can lend your limited company money (directors loans I think these are called??) and take repayments- again seek advice.

As above, you can protect your own assets if things headed South. For example, father might own the land the business occupies/uses and charges the LTD a rental fee. If the company racked up debt and popped, father's land is safe. That said, a business will need some assets (for example, the cows) if it is to hope to obtain any finance in it's own right. It will also need it's own accounts prepared (more cash for accountants) and they can't be too thin or suppliers might not like it.

Getting money out means the directors/owners can be taxed on it.

It's a huge tax dodge and the government know it, it's only a matter of time before they sort out the gaps IMO.

 

[ollie989898]

just looked and its lower than i thought at just £632k turnover

Surprising, a lot of farms could be caught up in that. Couple of million litres of milk might take them quite close.

 

[yellow belly]

ltd
easy to add share holders and continues when a share holder dies shares transferred and company continues unaffected

company can also pay into a pension direct

the biggest advantage is lower tax for higher rate payers who leave the profits in the business
leave land out a pay rent
when the assets are passed on to the next generation an fbt can be used to keep the farm business separate from the land owner ship

 

[yellow belly]

just looked and its lower than i thought at just £632k turnover

Every one looking up farmers looks for the sfp income

 

[Clive]

Every one looking up farmers looks for the sfp income

i’m actually not sure why anyone would be bothered about accounts being published

 

[Doing it for the kids]

It’s not always a tax dodge. You get taxed on profits made then tax personally if you draw in some circumstances.

a very large company near here turn over £100m per annum. They always go on about small margins, when you look into it their profits are <£5m. More to that than meets the eye but huge amount of gearing, I couldn’t sleep at night With those stats.

to the OP, it depends on many factors, seek professional advice. The cost to move old assets into the Ltd in the first place could be a deal breaker

 

[MrNoo]

I The cost to move old assets into the Ltd in the first place could be a deal breaker

Along with trying to liberate assets out of a Ltd Co. Complicated and very expensive. Had it here and only just paid it off now.