Originally posted by Hex
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One Ltd Co with 3 Directors all on different contracts??
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Public Service Posting by the BBC - Bloggs Bulls**t Corp.
Officially CUK certified - Thick as f**k. -
Agree.
This looks like an artificial scheme where the prime reason for the setup has nothing to do with the business and everything to do with not paying tax. Asking for trouble.Comment
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Originally posted by JudoStu View PostWhilst I do trust (to a point) my friends (and I'm sure they would think the same) none of us would have sole control over the account, we would all be joint signatory on it. The accountant would get to see the bank statements but would not have control over the account, she would just advise us what is available as a dividend for each of us to take.
If you're genuinely in business together, i.e. if one person isn't working he still gets a third of the income because you all support each other, that's different.Will work inside IR35. Or for food.Comment
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I have clients in a similar predicament. Here's what I would suggest:
each of you should form a limited company - keeps you under VFRS threshold so you can save 4-5% on your contract. You also therefore maintain control of your own income / profits and there are no disputes as to who has earned more etc etc. If you are looking to share the profits on the basis of what you each have individually earned then yuo would have to vary the shares so that director A has for the sake of argument, A shares, director B, B shares etc each with different rights. That's a composite company - no ifs, buts, or maybes.
If you want to be in business together then form a separate company or LLP for your combined activities - you can then trade through it and pay each of you a bonus based on merit. Presumably your individual contracting activities will push you into 40% tax anayway so how this is paid is largely irrelevant. Using an LLP gives you even more flexibility as to how you pay yourself.
Off topic a bit: Do you really want to be in business with your friends. Often, the friendship suffers.Comment
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New on here - hello all
So confusing, but thanks to all the previous posters...
I am in the process of looking at similar solutions. My company was started 10 years ago and over the past 5 or 6 years I have been mainly doing consultancy work, rather than contracting. The company has several clients and fulfills other requirements that I believe make me fall outside IR35 (although that's not the issue here).
However over the past year or so I have started working with two guys who essentially work for me as associates (they have their own companies and invoice me for their time). This is because I am now generating more business than I can comfortably handle. These two don't concern me as we get the work they help me out or do a piece of work directly and they invoice their services as a supplier.
However, my wife is now going to start working for me - previously she has helped out in the background as she has similar skills to me, but now she can be employed. The idea was that she would take a salary and dividends, but I would create two classes of shares so that she could take a dividend based on her revenue generation (much less than mine) and I could take a dividend based on my earnings. This is not a tax avoidance scheme, but simply my desire to make sure that everything is above board! I take a reasonable salary and some years no dividends have been declared when earnings have been lower than "normal".
Does all this hoo-haa mean that I shouldn't be doing this now? Or should I just keep the shares the same and declare the dividend that way? All I want to do is build a consultancy that maybe one day could employ several people is it too much to ask?
Oh, such confusion - why is it so hard to actually do the right thing, when there are rogue business people out there fleecing the system with apparent immunity?!?Comment
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