Newbie Ltd company formation with contacting friends

[nzbenny]

I have a first contract lined up, as does my permie friend who does similar consulting work (Oracle/SAP). I am trying to determine if there are any pros/cons in setting up a limited company that employs us both - rather than one each?

I assume we may save a little on costs, but not much. But, more importantly - does this make us less open to IR35? In theory, we could each do each others role for each others clients. Plus, it looks like we have kmore clients/contracts etc than just a single person company.

Btw - we are very good friends, so I realise the obvious risks of truyst ect.

Any experience from those that have doen this would be much appreciated.

Thanks!

[Mordac]

does this make us less open to IR35? In theory, we could each do each others role for each others clients. Plus, it looks like we have kmore clients/contracts etc than just a single person company.

In theory you could, but what matters is whether you could in practice, i.e. whether it's stipulated in the contract. So in that respect, having a 2 man company makes no difference on its own.

[The Master]

Although possible, it sounds like a poor idea. Sooner or later you and your friend will fall out over something and it'll all end in tears. Keep business and friendship separate.

[boredsenseless]

Although possible, it sounds like a poor idea. Sooner or later you and your friend will fall out over something and it'll all end in tears. Keep business and friendship separate.

True and if you intend on paying dividends bear in mind that these must be equal across the shareholding so if you own 50% and he owns 50% then you'll get a dividend of the same amount each even if you where the only one contributing funds during that period.

There are ways to structure the company to mitigate this but not actually avoid it.