New company with a business partner - what to do with existing one ?

[nicofars]

Not sure where to get the advise, yes I can ask my account but he will just give me the legal aspect.

So as the subject of my post, I am going to move my activity a little bit wider and partner with someone who doesn't have a business yet. To start "fresh" we decided to create a new entity so that my own limited doesn't have to change anything and in fact just to have a new name and new everything.

So the first question is : what to do with my current Limited? Shall I just keep it open for now so that I can always contract on it while we are trying to attract business on the join company ? and later make it dormant ?

Is there anyone out there who has done this before ? Did they just open their own Ltd to the new partner instead ?

My other question may be naive / cheeky but I try:
- is there any advantage money/tax-wise to have each other company to invoice the other (1 way or both?)
For instance, shall I stay on my current Ltd PAYE and I invoice my time to the New Ltd for a while ?

many thanks for your help, even if it's to persuade me not to partner with someone ;-)

[northernladuk]

If your accountant is giving you legal advice and not financial advice you need to get another one. He should be the perfect person to go to with the question about invoicing each company as well as what to do with your existing company... So... Ask your accountant.

Until you do get to speak to them have a look at the link below and scroll down to associated companies..

[TheCyclingProgrammer]

I would echo what NLUK says but as a general point if you've started a new venture but forsee you still doing some contracting it might be wise to keep YourCo going as I don't see why you'd want to start putting it through the new company and mixing businesses up.

[Maslins]

I would echo what NLUK says but as a general point if you've started a new venture but forsee you still doing some contracting it might be wise to keep YourCo going as I don't see why you'd want to start putting it through the new company and mixing businesses up.

This.

Jointly owned Ltd Cos (where owners aren't husband & wife/similar) can often end badly. Of course sometimes they work well, but frequently upset kicks in, typically as one party believes they're putting in much more effort than the other.

IMHO where they do work tends to be where the people concerned have very different skills, so they simply can't do each other's jobs. They therefore need each other for it to work. If you both essentially have the same skills, one/both of you will often start to think they should have just done it all themselves.

You can potentially get one company to invoice the other, but there's not really much in the way of clever tax savings to be had from doing that. Normally it just means one company's profit drops by the same the other one increases, hence net impact unchanged. Do take care with VAT though, eg if one company's on flat rate scheme/not VAT registered.

[nicofars]

thank you for the responses, quite useful (different skills / work better ...) good to take into account al the advise.

[Rob79]

Why don't you keep your company, have your proposed colleague form his own company and then trade together in a partnership or some form of contractual JV?

I would echo what NLUK says.

If your accountant is incapable of grasping the business concept and advise you, go elsewhere.