Reply to: Diversifying?

[oraclesmith]

Doesn't this apply in both scenarios? i.e. if she is part of MyCo, MyCO can claim the VAT back and offset them against profit.

It depends on MyCo's situation. It's my understanding that a newly registered company can reclaim VAT (goods 3 years prior to registration, services 6 months). If MyCo has been registered for VAT and trading for a long time and is on flat rate scheme then no chance of reclaiming VAT on Mrs Mustangs purchases. In my opinion.


Also there are first year capital allowances against corp tax that Mrs Mustang may miss out on if her business is just an additional business activity of your firm. You should really see an accountant because there are many variables involved, including how HMRC regard the split between activities.

[Mustang]

How much does it cost to rent a private pool? will the pool insurance cover her activities?

It varies - anything from £10 to £20 per hour. If it doesn't she will get her own insurance.

when I setup another un-related company but wanted to finance out of existing company, accountant said to record it as consultancy fees

Thanks for the tip. At the end of the day it doesnt make a difference to me. I want to ensure I do it the easiest and most tax eficient way.

[Troll]

Mrs Mustang is using private pools, primarily due to the age group she will teach and the fact the pools have to therefore be at 30 degC.

How much does it cost to rent a private pool? will the pool insurance cover her activities?

Also back to the original point - when I setup another un-related company but wanted to finance out of existing company, accountant said to record it as consultancy fees

[Mustang]

Mrs Mustang will have to charge VAT from day one if Mr Mustangs business is registered and she's trading as part of it. For a B2C company this means needlessly high prices for the customer and trading at a disadvantage compared to one-man band coaches.

Agreed - that is certainly in favour of having a seperate LTD

Also if Mrs Mustang has set up costs (eg. publicity) and purchases capital items (training equipment) then she will be able to get all or most of the VAT back if she's eventually has to register for VAT, if she's a separate company, and can set most of these against profits.

Doesn't this apply in both scenarios? i.e. if she is part of MyCo, MyCO can claim the VAT back and offset them against profit.

You need to see the artificial separation rules which HMRC use, to determine if the businesses are close enough to warrant coming under one VAT umbrella.

I will certainly read up on these.

Bottom line: We will talk to my accountant before I make a final decision - I was just seeing the panel's opinion.

[Troll]

Yes and Yes

Those are two seperate issues and unconnected to the original post! They will have to be done whether it is a seperate LTD or not!!

Yes but most posts go off on tangents... didn't want this one to be any different

[Mustang]

Also won't Mrs Mustang have to do Risk Assesments and submit to kiddie fiddling background check thingy

Yes and Yes

Those are two seperate issues and unconnected to the original post! They will have to be done whether it is a seperate LTD or not!!

[Mustang]

I'm very anti this - when the young trolls were learning to swim the local lifeguards used to teach them while I went off to do my lengths..along came a company who provided swimming lessons, lifeguards were issued a letter by the council telling them to stop giving lessons and the fecking swimming company demanded one of the lanes be reserved for their exclusive use !

Plus once the operation was up and running they didn't have enough teachers to cope with demand!

I wasn't sure about councils rights to grant exclusive monopolies for public amenities

Mrs Mustang is using private pools, primarily due to the age group she will teach and the fact the pools have to therefore be at 30 degC.

[Troll]

Mrs Mustang is looking at the possibility of setting up a company/franchise to provide swimming instruction. Ultimately she will set this up as a seperate company but in the meantime we were talking about her establishing it as part of MyCo and using MyCo funds to make initial investments.

What is the best way of going about this so that it could become a seperate business?

Would I have to notify Co House that the class of business has changed?

All advice welcome.

Also won't Mrs Mustang have to do Risk Assesments and submit to kiddie fiddling background check thingy

[oraclesmith]

Mrs Mustang will have to charge VAT from day one if Mr Mustangs business is registered and she's trading as part of it. For a B2C company this means needlessly high prices for the customer and trading at a disadvantage compared to one-man band coaches. Also if Mrs Mustang has set up costs (eg. publicity) and purchases capital items (training equipment) then she will be able to get all or most of the VAT back if she's eventually has to register for VAT, if she's a separate company, and can set most of these against profits.

You need to see the artificial separation rules which HMRC use, to determine if the businesses are close enough to warrant coming under one VAT umbrella.

[Troll]

Mrs Mustang is looking at the possibility of setting up a company/franchise to provide swimming instruction. Ultimately she will set this up as a seperate company but in the meantime we were talking about her establishing it as part of MyCo and using MyCo funds to make initial investments.

What is the best way of going about this so that it could become a seperate business?

Would I have to notify Co House that the class of business has changed?

All advice welcome.

I'm very anti this - when the young trolls were learning to swim the local lifeguards used to teach them while I went off to do my lengths..along came a company who provided swimming lessons, lifeguards were issued a letter by the council telling them to stop giving lessons and the fecking swimming company demanded one of the lanes be reserved for their exclusive use !

Plus once the operation was up and running they didn't have enough teachers to cope with demand!

I wasn't sure about councils rights to grant exclusive monopolies for public amenities

[TheFaQQer]

You don't need to inform Companies House - it's the main activity of the business that they are interested in. Same for the VAT registration - if you're on flat rate scheme then it's based on the main income generator for the business.

Most of the insurance you may have will only cover the insurance side of the business - most insurance companies will offer cover for part of the business, so I have separate insurance for my part of the company than my wife does for her part.

As to whether you should do this - it depends on how likely the second part is to make any money. My wife's side of the business is a long way from turning a profit - so it's part of my Ltd co. This allows the startup costs to be offset from the profits from one side of the company, and she also draws a salary from the company as recognition for her role in building up that part of the business. If it goes pear shaped, or doesn't start to show some money soon, then we'll probably cut her salary and close that part of the business down.

You can always have a "Trading As" name for the business - Mrs. F has a completely different trading name from my brand, which is a trading name for the company (i.e. I have MyCo Ltd trading as FaqqerCo and MrsFaqqerCo). All payments are made to the company name, so I don't even need to tell the bank about the trading names.

HTH,

Faqqer

[Paddy]

You can “Trade as (NAME) from a limited company. The company that I use covers all ventures from processing turkeys to buying and selling property. It think it would be wise to use the same company as you will offset expenses.

[DimPrawn]

Setup a new ltd.

I initially ran Plan B under my IT contracting company. Big mistake.

An account will setup a new company for nothing or next to nothing. Trust me, don't try and run different types of business under one ltd.

[XLMonkey]

Good points so far! Any more from anyone else?
I guess there is nothing preventing MyCo investing in HerCo to help with start up costs. Would that be done by MyCo being a shareholder or by investing capital, or both?
TIA

Strictly speaking, there is no difference between being a shareholder and investing capital.

You should speak to an accountant, but probably your best option is to set up the company however you want, then have yourco lend herco the money.

At the end of the financial year, herco should then pay back some of the money/interest on it, OR, convert the loan to shares in the company (you can set a value on the shares to enable you to control the percentage of herco that ends up being owned by yourco).

That's what Roman Abramovich did, anyway.

[Mustang]

Good points so far! Any more from anyone else?

I guess there is nothing preventing MyCo investing in HerCo to help with start up costs. Would that be done by MyCo being a shareholder or by investing capital, or both?

TIA