2 companies or 1 company 2 staff?
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    Default 2 companies or 1 company 2 staff?

    Hi all!
    Can anyone tell me if it's better to have 2 separate limited companies, or 1 limited company for 2 contractors. Hubby and I are both contractors and have a company each, but are considering merging into one.

    Any thoughts? I'm guessing its better for IR35, but thats a guess.

    Thanks. K

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    IR35 is per contract. It may help with the business entity tests to keep you off the radar though.

    Personally I would say keep separate. IR35 can be managed in two companies just as well, savings on combined costs are pretty negligible really. Also avoids a horrendous situation should the partnership/marriage go wrong. We have seen a couple on here so it does happen.
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    The link below will have some other posts about both in the same company. It's not a good search as it has a lot about wives being shareholders so may need to dig a bit. The very first post covers your situation. You will see from that it's a bit contentious on here with lots of arguments about tax and so on.

    https://www.google.co.uk/search?q=wi...ntractoruk.com
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    Hubby and i both have our own ltd companies, but he's been out of work for a while and not doing well. He's just got a new contract and we're wondering if we're better amalgamating into my company.
    I am guessing a whole host of other information will slowly start trickling out changing the situation and advice... so it's back to 'Speak to your accountant' for me.
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    Advantages of working through one company (that I can think of):
    • Easier to still take income if one person is working and the other isn't
    • One set of accountancy charges
    • Might look more like a business, so pass the Business Entity Tests and reduce the chance of an IR35 investigation

    Disadvantages of now working for the same company:
    • Are you going to give / sell shares to allow dividends to both of you?
    • If you are both shareholders, need to pay dividends at the same time to both of you
    • Might breach the FRS threshold
    • If you split up, you need to split the business as well

    I'd do it.

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    I'd say that if you have established companies then it's easier to keep them separate, you know how your business works and how it works for you.

    If you really want to "merge" then one of you move into the other's company and run down the legacy. Easiest option, certainly easier than formally merging companies. Make sure you're fully equal shareholders with joint decision making rights, 49% of shares is about as useful as 1% if things get difficult.

    Get proper advice from an accountant who knows what he's talking about rather than a standard contractor accountant.

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    Should post faster


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    Quote Originally Posted by LotsOfHeadScratching View Post
    Hi all!
    Can anyone tell me if it's better to have 2 separate limited companies, or 1 limited company for 2 contractors. Hubby and I are both contractors and have a company each, but are considering merging into one.

    Any thoughts? I'm guessing its better for IR35, but thats a guess.

    Thanks. K
    You could do a hive up of trade and assets - but in line with the above poster - you may breach the VAT FRS limits and therefore may be best to keep separate (assuming the splitting business rules are not breached - ie the businesses are truly separate)

    Andrew

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    Default Thanks everyone!

    Thanks for the info everyone!

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