So have been working for some time on-and-off for ClientCo for basically no coin on the understanding we'd eventually move to an equity deal, ie they're offering a % of the company. This is finally getting put down on paper soon. (yes yes I know it was risky working with nothing in writing, but that was my choice and is beside the point of this topic.)
Original agent has long since been paid out and is no longer of any concern.
So question is, is it best if MyCo owns this (for example) 10% share in ClientCo or should I own it directly?
Obviously I own 100% of MyCo, so I guess its a case of;
A) I own 100% of MyCo which in turn owns 10% of ClientCo
B) I own 100% of MyCo and 10% of ClientCo
Which would be best/easiest and I guess, most importantly as always, most tax efficient? Or is it not going to matter either way in the end?
ClientCo is a small online startup, so (apart from me as a developer!) has low overheads, thus most profit would become dividends. At the moment profit is basically nothing but obviously in time its hoped this would grow. Even at only a small % share its hope this would become a quite nice dividend potential. At some further point in time the whole thing may be sold, thus leaving bestowing a significant capital gain. The point is, while its basically worth nothing now, it could be worth something sometime and that's when tax efficiency would obviously be key.
Thoughts?
Original agent has long since been paid out and is no longer of any concern.
So question is, is it best if MyCo owns this (for example) 10% share in ClientCo or should I own it directly?
Obviously I own 100% of MyCo, so I guess its a case of;
A) I own 100% of MyCo which in turn owns 10% of ClientCo
B) I own 100% of MyCo and 10% of ClientCo
Which would be best/easiest and I guess, most importantly as always, most tax efficient? Or is it not going to matter either way in the end?
ClientCo is a small online startup, so (apart from me as a developer!) has low overheads, thus most profit would become dividends. At the moment profit is basically nothing but obviously in time its hoped this would grow. Even at only a small % share its hope this would become a quite nice dividend potential. At some further point in time the whole thing may be sold, thus leaving bestowing a significant capital gain. The point is, while its basically worth nothing now, it could be worth something sometime and that's when tax efficiency would obviously be key.
Thoughts?
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