Reply to: Taking money I loaned my company back out

[Chatterbox]

You could give up hookers and coke so you wouldn't need the 3k.

Or I could give up my health insurance and my trip to my girlfriend who is still stuck in Oz.

However, once I do acquire a sustainable hookers and coke habit, I'll let you know so we can party.

[northernladuk]

You could give up hookers and coke so you wouldn't need the 3k.

[Lance]

My accountant told me to put the money in so I wouldn't run into any insolvency issues, to be sure, and be prepared for unexpected costs (flights, hotels etc). Might have been my own fault, because I was definitely a bit nervous.

you could pay for all that personally and then submit expenses to the company. The company only needs cash to pay it's liabilities that aren't to you.

He said he could advise me on my personal tax (I'm resident in Portugal, not UK), but then pedalled back on it after saying a lot of general things like "Oh, I have non-resident directors in poland, they're all fine, and such", and wanting me to commit to a monthly contract. He was a recommendation from a friend, none the less, but they have quit him since too. :/

get professional advice. Portugal isn't the UK so there are plenty of things to worry about.
In fact you might be able to take dividends without paying any tax at all in Portugal, but again you need professional advice unless you want to really screw it up.

[Lance]

Quite possibly! But I've never run a business and a lot of this is still freaking me out a bit. I've had stories in my friends circles that are horrendous, and only cause by small oversights. I think once I've been through a full cycle of the financial year I will hopefully not end up going to prison

ftfy


It's kind of important you learn. You clearly need professional advice. You can't just wing this like other areas of life.

[Chatterbox]

Are you an IT contractor or some other kind of contractor?

How much income a month are we talking here? How much in expenses?

On its face you should be able to do this no problem, but on its face you should have never been told to put £8K in, so on the chance that the accountant who advised you wasn't a complete idiot, it would be nice to know a little more about this before saying, 'Oh, yeah, take the money out.'

Maybe he was an idiot but maybe there's a reason that we haven't been told, and this 'three gigs a month' thing makes me think there's more to this story....

I am sort of an IT contractor, I advise people on interactive software design...UX, monetisation, that kind of thing. Usually these projects last between 5 and 10 days, so that's why it's 3 gigs per month. I'm not yet sure about income and expenses (started trading a month ago), but I reckon it should be about 6k gross a month.

My accountant told me to put the money in so I wouldn't run into any insolvency issues, to be sure, and be prepared for unexpected costs (flights, hotels etc). Might have been my own fault, because I was definitely a bit nervous.

He said he could advise me on my personal tax (I'm resident in Portugal, not UK), but then pedalled back on it after saying a lot of general things like "Oh, I have non-resident directors in poland, they're all fine, and such", and wanting me to commit to a monthly contract. He was a recommendation from a friend, none the less, but they have quit him since too. :/

[WTFH]

If you look on the right hand side of the forum you'll see links to contractor accountants. Companies such as InTouch and Dolan (who are on that page) also post on here, and you can have a chat to them.
Getting a good accountant will make your first year end easy, but remember that an accountant is going to cost you money, expect it to be around £100-120 per month.

[Chatterbox]

Erm - don't over complicate matters.

Quite possibly! But I've never run a business and a lot of this is still freaking me out a bit. I've had stories in my friends circles that are horrendous, and only cause by small oversights. I think once I've been through a full cycle of the financial year I will hopefully be fine.

[WordIsBond]

if I only have an average of 3 gigs per month...?

Are you an IT contractor or some other kind of contractor?

How much income a month are we talking here? How much in expenses?

On its face you should be able to do this no problem, but on its face you should have never been told to put £8K in, so on the chance that the accountant who advised you wasn't a complete idiot, it would be nice to know a little more about this before saying, 'Oh, yeah, take the money out.'

Maybe he was an idiot but maybe there's a reason that we haven't been told, and this 'three gigs a month' thing makes me think there's more to this story....

[Scruff]

Erm - don't over complicate matters.

If YourCo. has £8k in the bank, and liabilities other than your Loan Account which are less than than £5k, then pay yourself the £3k back. You don't need notes, explanations or any other tosh. It is money that YourCo. owes you.

[Lance]

you need to understand what insolvency is. If your company is insolvent you are not allowed to trade as that's illegal.
You are insolvent if your debts exceed your credits+assets. IE. you owe more than the sum of the cash in the bank and the money owed to your company.

Bear in mind that the company owes you, so you are a creditor, but a special one meaning that as long as it only owes you it can be technically insolvent.

What that means is that you can repay yourself as much as you need as long as you don't drop into insolvency. It sounds like you can probably take that £3k out but just check that you can still pay bills.

[craigy1874]

Hi!

My account? I'm assuming you mean accountant? I had one, he advised me on my setup (including to put the loan in there) but turned out to be useless (and wrong!) after that, so I'm currently looking for a new one. I'm still wondering whether it's worth the monthly fee if I only have an average of 3 gigs per month...?

Not on FreeAgent.

We are talking about 8000 GBP, in the account, I need to take about 3000 of that out.

Not all accountants charge monthly fee. We can provide a year-end service only for example which is a one-off fee, dependent on the level of work involved.

But you should appoint an accountant of some sort.

In your example above, there should be no issues drawing out £3k of the previously loaned £8k.

[TheCyclingProgrammer]

Thanks for replying! By cashflow permitting, does that mean the company needs to get some money in first? Currently the only money in the biz account is the money loaned.

Cash flow means cash flow. Will repaying yourself some of the loan impact YourCo’s ability to pay its bills and any other liabilities?

[northernladuk]

Doesn't this situation kind of tell you that you do need an accountant? A good one will save you more money than they cost.

Get one that offers Freeagent. There is a sticky link with recommendations from other reputable posters.

[Chatterbox]

What does your account say about all this?

Are you on Freeagent to help account for it?

How much are we talking here.

Bit more info would be nice.

Hi!

My account? I'm assuming you mean accountant? I had one, he advised me on my setup (including to put the loan in there) but turned out to be useless (and wrong!) after that, so I'm currently looking for a new one. I'm still wondering whether it's worth the monthly fee if I only have an average of 3 gigs per month...?

Not on FreeAgent.

We are talking about 8000 GBP, in the account, I need to take about 3000 of that out.

[northernladuk]

What does your account say about all this?

Are you on Freeagent to help account for it?

How much are we talking here.

Bit more info would be nice.