Reply to: Limited company - having 2 directors - Suggestions needed

[Bumble79]

It's entirely up to the director when to declare and pay them. They can be as often as you like. You just need to ensure there is enough profit after taxes to cover the dividend.

Thanks Craig!

[Bumble79]

Yes, that sounds fine. If you anticipate your turnover in the next 12 months to be less than £150k then you can join the scheme. Though if your husband works through an umbrella for 2 months then that is a fair amount of tax efficiency lost. You are starting to jump through a few hoops now to make this work (but it can work if that's what you really want).

Thanks Greg!

[Craig@Clarity]

Thank you Craig and Lje !

Now speaking of dividends, Is it alright to take dividends every month or would it be more advisable to take
at irregular intervals , say, once in 2 months or quarter.

It's entirely up to the director when to declare and pay them. They can be as often as you like. You just need to ensure there is enough profit after taxes to cover the dividend.

[Bumble79]

Thank you Craig and Lje !

Now speaking of dividends, Is it alright to take dividends every month or would it be more advisable to take
at irregular intervals , say, once in 2 months or quarter.

[Greg@CapitalCity]

Thank you all for your inputs/advice/suggestions.

Now, say, If both my husband and I both set up a limited company as directors.
And my husband stays on with the umbrella company as well for the first 2 months and then start
receiving payments from the 3rd month through the limited company. The reason for asking this is ,if my
12 months of pay and his 10 months of pay falls within the 150,000 pounds pa would I be able to register for the FRS Scheme?

What are your thoughts on this ? Please advice.

Yes, that sounds fine. If you anticipate your turnover in the next 12 months to be less than £150k then you can join the scheme. Though if your husband works through an umbrella for 2 months then that is a fair amount of tax efficiency lost. You are starting to jump through a few hoops now to make this work (but it can work if that's what you really want).

[lje]

If I was in your situation I would have just one company and both my husband and I working through it. It simplifies things. I know that there could be issues with the flat rate scheme - but if so I would withdraw from it. I know this would cost a few thousand but it would be worth it to me to only have one company.

This is similar to the fact that I pay myself £15k a year rather than £7k. I pay more tax but it suits my life better as when I add it to my husband's earnings it's the right amount for us to live on and the dividends when they come are just extra.

[Craig@Clarity]

Thank you all for your inputs/advice/suggestions.

Now, say, If both my husband and I both set up a limited company as directors.
And my husband stays on with the umbrella company as well for the first 2 months and then start
receiving payments from the 3rd month through the limited company. The reason for asking this is ,if my
12 months of pay and his 10 months of pay falls within the 150,000 pounds pa would I be able to register for the FRS Scheme?

What are your thoughts on this ? Please advice.

If you have 1 company or 2 companies, the registration limit for flat rate is £150,000 in a 12 month period. So if you had 1 company and you had 12 months of trade combined with his 10 months of trade and within the year the turnover exceeds £150,000 you can't register for flat rate. Here's a link which may be useful for you HM Revenue & Customs: Flat Rate Scheme for VAT

[Bumble79]

Thank you all for your inputs/advice/suggestions.

Now, say, If both my husband and I both set up a limited company as directors.
And my husband stays on with the umbrella company as well for the first 2 months and then start
receiving payments from the 3rd month through the limited company. The reason for asking this is ,if my
12 months of pay and his 10 months of pay falls within the 150,000 pounds pa would I be able to register for the FRS Scheme?

What are your thoughts on this ? Please advice.

[Greg@CapitalCity]

Mortgages

Yes, I can see three reasons for keeping the companies separate;
(1) Keeping below the threshold at which you can no longer apply for the flat rate scheme for VAT;
(2) Earnings evidence - if you intend to, say, apply for a mortgage, working through a company that shares income with someone else will make it difficult for you to present your own personal earnings in a way the bank will easily understand;
(3) Risk - if your partner gets sued by their client, or if IR35 raises its head for them - liability will fall to both of you;

Various mentions here of Arctic Systems, but this does not apply here as both of you will be earning through the ltd company.

[Bugbait]

The new legislation was being developed by Labour but is now in the long grass.

Good times

[Fred Bloggs]

Fred was on the money, I just have bad memory .

The upshot of Arctic Systems Ltd now is that for a married couple, a 50/50 share split of a Ltd Co is going to be hard for Hector to challenge again without new legislation. The new legislation was being developed by Labour but is now in the long grass.

[Bugbait]

Fred was on the money, I just have bad memory .

[Fred Bloggs]

Yes, but Bugbait was specifically referring to a split based on there being two directors, which as you point out is not required.

Correct, that's why I kind of reinterpreted it as really meaning two shareholders!

[DaveB]

You need to be share holder to get the divis but not necessarily be a director (Mrs Bloggs is a shareholder but is not a director) that's why I suggested the case of interest here was most likely Arctic Systems Ltd.

Yes, but Bugbait was specifically referring to a split based on there being two directors, which as you point out is not required.

[Fred Bloggs]

I believe Arctic Systems was more to do with income splitting through share dsitribution than having two directors.

You need to be share holder to get the divis but not necessarily be a director (Mrs Bloggs is a shareholder but is not a director) that's why I suggested the case of interest here was most likely Arctic Systems Ltd.