I'm entering into a Plan B with another party and the nature of the business is such that it will need regular funding from us for at least a year but probably 3. I will be a 25% owner and in an ideal world I'd fund it out of my own money, however, I generally go over the tax thresholds already in dividends from my own contractor ltd co so really don't want to pay even more tax.
On the other side though, we are beginning to work through the numbers and can see this will either be a big flop or a big success, there isn't really a middle ground. If the latter does it just mean the inevitable sale of the venture in 5 years will return profit to my Ltd and I would just draw it out over time in the most tax efficient way possible?
In what way should the business fund the Plan B if I go that route? It's going to be around £1000 per month for the next 3 years. Is that a series of business loans, in which case I'll need to charge Plan B an interest rate (I can't manage that much up front so it needs to be monthly). Should it be a series of share purchases in Plan B? We don't particularly see the Plan B bank account having enough cash to to repay the loans at year 3 as all profit will need to be re-invested back into the business to fit the model we've come up with.
Any thoughts on the best way to approach? I haven't asked my accountants yet but they generally seem to struggle with all but the simplest of contractor questions and are amazingly risk averse. I've decided I can afford this venture (with some lifestyle changes), just want to do it most tax efficiently,
Cheers, Andy
On the other side though, we are beginning to work through the numbers and can see this will either be a big flop or a big success, there isn't really a middle ground. If the latter does it just mean the inevitable sale of the venture in 5 years will return profit to my Ltd and I would just draw it out over time in the most tax efficient way possible?
In what way should the business fund the Plan B if I go that route? It's going to be around £1000 per month for the next 3 years. Is that a series of business loans, in which case I'll need to charge Plan B an interest rate (I can't manage that much up front so it needs to be monthly). Should it be a series of share purchases in Plan B? We don't particularly see the Plan B bank account having enough cash to to repay the loans at year 3 as all profit will need to be re-invested back into the business to fit the model we've come up with.
Any thoughts on the best way to approach? I haven't asked my accountants yet but they generally seem to struggle with all but the simplest of contractor questions and are amazingly risk averse. I've decided I can afford this venture (with some lifestyle changes), just want to do it most tax efficiently,
Cheers, Andy
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