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New company formation - dividend split husband/wife

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    #11
    Originally posted by ContractorBanking View Post
    I used him before, several years ago when my original accountant migrated to Oz. Very friendly, approachable and has been doing this for over 30 years. I can meet him whenever I want, always offers advise is very organised. To be fair, he did say he would get back to me once he's spoken to his specialist so lets see what he sees.
    I don't necessarily want to decry a fellow professional but if he needs to refer to his specialist (which I suspect is t'internet) for a basic question like this then he's probably not as organised as you think. This isn't specifically a contractor question, it's a limited company question. Very worrying IMO.

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      #12
      Originally posted by Alan @ BroomeAffinity View Post
      I don't necessarily want to decry a fellow professional but if he needs to refer to his specialist (which I suspect is t'internet) for a basic question like this then he's probably not as organised as you think. This isn't specifically a contractor question, it's a limited company question. Very worrying IMO.
      Agreed, and Arctic Systems, the resulting "family business tax" etc.... were widely known about at the time in the mainstream press.
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        #13
        I have a 60/40 split
        Wife used to be employed by my ltd co as well but presented her with a P45 when she accepted a job somehwere else

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          #14
          I have clients who have share splits from 50/50 all the way to 90/10. It depends on other income as mentioned above. But assuming there's nothing outside the company complicating things 50/50 is fine, although there's a school of thought that 51/49 is better.

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            #15
            Here we go again with Internet experts bashing a guy's accountant when they may not know the whole story.

            Newly-married, huh? How many marriages go pear-shaped in the first 3-4 years? How much of a problem would that create for OP? When your whole life is being turned upside down, which could easily happen, it would be nice at least if the business is under control. 80-20 is a lot easier to fix than 50-50 if things fall apart.

            My accountant asked how long my wife and I had been married before recommending a share split.

            Another accountant I interviewed before choosing the one I have recommended always keeping at least 70% control, giving wife 30%.

            There are immense reasons, not tax related, for not using a 50-50 share split.

            Is darling wife working? If so, 80-20 might be exactly right, but the experts here declare the accountant incompetent? Sure.

            Is OP making less than £50K profit a year? If so, 80-20 might be just as good for him, as far as taxes are concerned, as 50-50.

            My advice to OP: anything that anyone says here that rings true, don't dump your accountant or assume he's stupid. He probably isn't stupid. Instead, ask him to respond to what people say and weigh his responses. There may or may not be good reasons for the things he says, but don't assume that the people on here who don't know your circumstances are better equipped to advise you than he is. Feel free to challenge him, he works for you (not the other way around). But more often than not, a professional accountant's advice to his clients is going to be sound.

            To answer your question, I've been married for more than 2 1/2 decades, happily so. And I use a 50-50 share split with my wife in the equity we've retained (not a one man band, other workers have small share holdings, too).

            If you are newly married, I'd recommend a 70-30 or 80-20 split. With the exception that some people have religious beliefs that dictate a 50-50, and if so, obviously go for that.

            Alternatively, you can go for 50-50 and always pay out all your profit (after corporation tax, obviously) in dividends. Then, if your marriage goes sour, there's no assets in the company, you can just wind it up and start another if you need to. But a 50-50 split with retained cash in the company is a pretty risky and stupid thing to do without a really solid marriage history.

            Nobody, especially the newly married, likes to think about a marriage going wrong, but there's no reason to be stupid. You think you know her, and she thinks she knows you, but give it some time and you'll find out you didn't know her all that well. She'll be either better (hopefully) or worse than you thought.

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              #16
              Never heard that one before. Base your company on how many years you've been married. lol.
              Rhyddid i lofnod psychocandy!!!!

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                #17
                Originally posted by psychocandy View Post
                Never heard that one before. Base your company on how many years you've been married. lol.
                "base your company"? No.

                "consider how best to distribute the share ownership"? Yes.

                The two are very different concepts.
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                  #18
                  Originally posted by TheFaQQer View Post
                  "base your company"? No.

                  "consider how best to distribute the share ownership"? Yes.

                  The two are very different concepts.
                  But surely if you're married/got house etc you've got a lot more to worry about financially then your limited company setup potentially if things go belly up. Fair enough if theres a huge warchest in company accounts I can see the point.
                  Rhyddid i lofnod psychocandy!!!!

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                    #19
                    Originally posted by psychocandy View Post
                    But surely if you're married/got house etc you've got a lot more to worry about financially then your limited company setup potentially if things go belly up. Fair enough if theres a huge warchest in company accounts I can see the point.
                    Some people can amass a substantial warchest so it can in some cases eclipse the house issues if you are not careful. We have a poster on here who's partner ran of with 20k worth of business money and there is sod all they could do about it. Just because you have the house issues doesn't mean you throw this in without any thought.

                    Surely the whole point of us doing this is to work towards large pots if money in the company?
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                      #20
                      Some updates for everyone's benefit:

                      I'll be the sole earner, my wife is a full-time mother. She won't have any income other than the Contracting Ltd Co payments.

                      As for the marriage and shareholding split - I appreciate the 'warning' but I'm happy to go with 50/50 split if that is indeed the most efficient method.

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