Starting a new business

[Maslins]

On the VAT stuff, as these businesses are related you cannot have one which is VAT registered and the other which is not.

Appreciate the OP will likely meet the top two criteria on that link, but I personally think it'd be safe. Providing IT consultancy to businesses and importing goods from abroad to sell to consumers
sound to me like unrelated businesses, hence IMO wouldn't be caught by those rules.

If the OP was providing IT consultancy to businesses through one Co and IT consultancy to consumers through another Co, then it'd be a different kettle of fish.

@kembljoe for simplicity I'd recommend taking more money personally out of Co 1 and loaning it to Co 2 to help it get started. If you want to avoid this (eg for personal tax reasons) Co 1 can directly lend money to Co 2...but I'd strongly recommend you do this as a one off/very occasional lump sum transfers, rather than just getting Co 1 to pay for everything on Co 2's behalf. Otherwise you'll have a bookkeeping nightmare to deal with.

[kembljoe]

If you want to avoid this (eg for personal tax reasons) Co 1 can directly lend money to Co 2.

When Co1 lends money to Co2, does it work like director's loan?

As I know, in director's loan, the director has to give the money back within the next 9 months starting from the company's accounting period along with the interest calculated based on the time you hold the money for and along with some NI contributions.

Do the same rules apply when Co1 lends money to Co2 or can Co2 give the loan back, let's say, in 2 years' time without paying any interest/NI contributions?

Sorry for keeping asking questions but I am getting very nice help here and trying to arrive a conclusion and I am nearly there with your precious help and knowledge.

[Craig at Nixon Williams]

When Co1 lends money to Co2, does it work like director's loan?

As I know, in director's loan, the director has to give the money back within the next 9 months starting from the company's accounting period along with the interest calculated based on the time you hold the money for and along with some NI contributions.

Do the same rules apply when Co1 lends money to Co2 or can Co2 give the loan back, let's say, in 2 years' time without paying any interest/NI contributions?

Sorry for keeping asking questions but I am getting very nice help here and trying to arrive a conclusion and I am nearly there with your precious help and knowledge.

The director's loan rules do not apply when it is a loan made to another company, irrespective of whether the two companies are associated with each other.

The loan would therefore not ned to be repaid within 9 months of the year end and likewise the company would not be required to pay interest on the loan.

Hope this helps!
Craig

[kembljoe]

The director's loan rules do not apply when it is a loan made to another company, irrespective of whether the two companies are associated with each other.

The loan would therefore not ned to be repaid within 9 months of the year end and likewise the company would not be required to pay interest on the loan.

Hope this helps!
Craig

Thanks Craig.

So what you are saying is that if Co2 gets £10K loan from Co1 and uses that as an investment for the online business and starts earning money, let's say after 2 years, Co2 can pay only the loan amount (£10K) back to Co1 without any interest and any tax.

What if Co2 can not make any profit and I decide to dispose Co2, do I have to somehow pay that £10K back to Co1 or can I just wipe that money out?