Reply to: For plan B business bank account is it possible to inject personal account money into

[northernladuk]

Well Kicked! I believe it is illegal to claim to be accountant, lawyer or doctor unless you have recognised professional qualifications. This guy Nimble does appear to know which way is up!

You sure you meant that last sentence?

[Taita]

Are you sure your an accountant?
a) its not a fine, its a tax charge payabe to HMRC in case you dont pay the loan back.
b) its not at year end, its 9 months after the year end you took the loan out
c) you can claim the "fine" back 9 months after the year end you in which repay the loan
d) its irrelevant in this thread as the OP wa talking about sticking £100k into the company, not taking it out.

There.. youve had the kicking NLUK requested

Well Kicked! I believe it is illegal to claim to be accountant, lawyer or doctor unless you have recognised professional qualifications. This guy Nimble does appear to know which way is up!

[northernladuk]

As everyone else has mentioned you can using a Directors Loan, however if it is over £5,000 at year end you will face a fine of 25% !!

Have you read the newbie guides -->
Have you done a search?
Speak to your accountant...

Have I missed anything?

[b0redom]

As everyone else has mentioned you can using a Directors Loan, however if it is over £5,000 at year end you will face a fine of 25% !!

I'm glad you're not my accountant! For all the reasons IR35FanClub mentioned.

[Contreras]

As everyone else has mentioned you can using a Directors Loan, however if it is over £5,000 at year end you will face a fine of 25% !!

What they said - get an accountant.

[Scrag Meister]

Err... that's what a director's loan is actually for.

This.

[Wanderer]

Interesting... I suppose the initial amount that you put into the business bank account at incorporation is important (as this is not considered as a loan right ?) and this initial amount is related to the shares that you initially draw up ? (am I right or wrong ?)

Yes, it is important.

This is your liability to the company. If you have one share worth £1 then if it all goes tits up, you are liable for £1. If you issue 100,000 shares at £1 each then your liability to the company (and potentially it's creditors) is £100,000.

I would suggest that you just issue one share at £1 each and then loan money to the company via director's loan.

It's now time to have a talk to a proper accountant to make sure you set this up properly.

[sbakoola]

thanks for the info, learning new things. I used my old limited for IT contracting in the typical boring way i.e. money in, pay PAYE, Corp Tax, VAT and money out as dividends and wages, with a few claims for items over £2k due to being on the flat rate VAT scheme.

[IR35FanClub]

As everyone else has mentioned you can using a Directors Loan, however if it is over £5,000 at year end you will face a fine of 25% !!

Are you sure your an accountant?
a) its not a fine, its a tax charge payabe to HMRC in case you dont pay the loan back.
b) its not at year end, its 9 months after the year end you took the loan out
c) you can claim the "fine" back 9 months after the year end you in which repay the loan
d) its irrelevant in this thread as the OP wa talking about sticking £100k into the company, not taking it out.

There.. youve had the kicking NLUK requested

[IR35FanClub]

One last point.. in your fictional VAT example you would be effectively trading illegally as you do not have enough cash in the company to pay your creditors (HMRC) and they dont take kindly to people running companies who cant work out what they are owed. I did a stint at the insolvency service and they have a team dedicated to working out whether the directors were negligent or fraudulent. the first gets you struck off from becoming a director again, the second gets you a criminal conviction. And HMRC have no bones about applying for a liquidation if they suspect you have not run your accounts properly. They also come at the top of the list of creditros (unless you are planning to start a football club). You shuld have a (IT) system which tracks the VAT owed on sales and you can keep it in a separate reserve account if necessary until its due to be paid.

[NimbleJackAccounting]

Yes

As everyone else has mentioned you can using a Directors Loan, however if it is over £5,000 at year end you will face a fine of 25% !!

[IR35FanClub]

To try and make it easier to understand.. think of a directors loan account as a bank account, it can be in credit or overdrawn. With the directors loan account if it is in credit it means you have put some money in the company or spent money on behaf of the company and therefore the company owes you money. If the dirctors loan account is overdrawn, it means you have taken some money from the company which you need to pay back. (this seems to be what you are familar with).
When you start this fictional company, you can capitalise it with shares, but then to take money out you need to pay dividends which have to be taxed. If you personally lend the company money instead, you can repay the loan tax free, as it is your money.

[IR35FanClub]

[accounts=sbakoola;1702876]Interesting... I suppose the initial amount that you put into the business bank account at incorporation is important (as this is not considered as a loan right ?) and this initial amount is related to the shares that you initially draw up ? (am I right or wrong ?).

Normally for I.T. contractor limited its a £1.00 initial amount and just one share at £1.00.[/QUOTE]

Really.. you need an accountant before you start winding people up and get called a sockie. its just been explained that what you put into the company IS a loan, from you to the company, which can be paid back later. You can make the company pay with the loan with interest if you want but you'll need to declare that on your personal tax return as income. an accountant will tell you if that is sensible given your business idea.

And £1/1 share is not normal. there's no normal. my company had 1000 shares of which 100 are issued. it was because i went to see an accountant and said although i do contacting now, i may want to do something else later and sell shares to investors to raise capital.

you dont need to have a company to have an accountant. I'm setting my gf up a business and took her to see an accountant to discuss the best way to set it all up. advice was not to go ltd until she his circa 40k earnings and be sole trader till then.

[sbakoola]

Interesting... I suppose the initial amount that you put into the business bank account at incorporation is important (as this is not considered as a loan right ?) and this initial amount is related to the shares that you initially draw up ? (am I right or wrong ?).

Normally for I.T. contractor limited its a £1.00 initial amount and just one share at £1.00.

[Wanderer]

But if you're buying equipment, you could just pay for it personally and reclaim the expense from the company at a later date. It all amounts to the same thing.

And if the company goes bust then you still own the equipment personally and not the company....