Brother as sole director of ltd

[Paddy]

The obvious things to be careful about

1 What happens if your brother dies in a car crash one day, who inherits the money in the company? tax implication for any such inheritance?
2 Your brother gets married/divorced or unexpected child turns up with a mother demanding maintenance... what happens to the money?
3 Your brother gets arrested for some serious crime?
4 Somebody sues your brother for something, and the court ends up taking account of all his assets including this company?

These are reasons people dont bother with this approach

Shareholders own the company, not directors (unless they are also shareholders)
Brother would need to someone to have POA (power of attorney) in case he becomes incapacitated or dies.
Articles could be drawn up to suit arrangement. Profits could be held in a trust fund.
Shares could be held by a shell company.

[SueEllen]

Oh this is going to end well. Cant wait for the next posting in the series 'I made my brother the director and owner of 'my' limited company and now he's run off with all the money and will not return my calls!'

More likely the brother's wife find's out and goes after the money.

[washed up contractor]

Hi.

I'm now to these forums and contracting in general, so maybe a stupid question coming up as I've got a lot to learn...

I'm currently a perm, but I'm interested in going contracting. Are there any issues with setting a ltd company with my brother as the director and owner, and me as an employee? We are very close and I'm confident there would be no issues between us, but wondered if anyone had any experience or advice on this?

The reason for this is I'm in a difficult marriage, divorce is a possibility in the next couple of years and whilst I will always support my kids, my wife would try to take me to the cleaners for everything I've got - so looking for ways to protect myself and preserve the right to some kind of modest life after splitting up!

Thanks

Oh this is going to end well. Cant wait for the next posting in the series 'I made my brother the director and owner of 'my' limited company and now he's run off with all the money and will not return my calls!'

[Mordac]

Hi.

I'm now to these forums and contracting in general, so maybe a stupid question coming up as I've got a lot to learn...

I'm currently a perm, but I'm interested in going contracting. Are there any issues with setting a ltd company with my brother as the director and owner, and me as an employee? We are very close and I'm confident there would be no issues between us, but wondered if anyone had any experience or advice on this?

The reason for this is I'm in a difficult marriage, divorce is a possibility in the next couple of years and whilst I will always support my kids, my wife would try to take me to the cleaners for everything I've got - so looking for ways to protect myself and preserve the right to some kind of modest life after splitting up!

Thanks

The divorce lawyer will have you for breakfast, and HMRC will have what's left for lunch. In short, you're toast, and now I've run out of food related metaphors.

[malvolio]

If you are seen to be running the company anyway through a sham arrangement with your brother, it's not going to make much difference to hiding your money from the wife.

Like I said - look it up...

[northernladuk]

How helpful

Says the tedious sockie.

[TonyF]

If you are seen to be running the company anyway through a sham arrangement with your brother, it's not going to make much difference to hiding your money from the wife.

[SueEllen]

How helpful

If you ask serious questions in general rather than the right forum - in this case accounting/legal - then you get stupid replies.

[The Castle Cary Fairy]

Hi.

I'm now to these forums and contracting in general, so maybe a stupid question coming up as I've got a lot to learn...

I'm currently a perm, but I'm interested in going contracting. Are there any issues with setting a ltd company with my brother as the director and owner, and me as an employee? We are very close and I'm confident there would be no issues between us, but wondered if anyone had any experience or advice on this?

The reason for this is I'm in a difficult marriage, divorce is a possibility in the next couple of years and whilst I will always support my kids, my wife would try to take me to the cleaners for everything I've got - so looking for ways to protect myself and preserve the right to some kind of modest life after splitting up!

Thanks

Hi BF1974, sorry to hear about your marital woes.

As WTFH says, get these issues sorted out before you even think about going contracting. The lifestyle has plenty of stresses of its own and these, coupled with the extreme stresses of a difficult divorce would just be too much in my opinion.

[malvolio]

...

These are reasons people dont bother with this approach

The main one being the issue of Shadow Directors... Look it up.

[The Castle Cary Fairy]

Can your brother bleed radiators?

How helpful

[CoolCat]

The obvious things to be careful about

1 What happens if your brother dies in a car crash one day, who inherits the money in the company? tax implication for any such inheritance?
2 Your brother gets married/divorced or unexpected child turns up with a mother demanding maintenance... what happens to the money?
3 Your brother gets arrested for some serious crime?
4 Somebody sues your brother for something, and the court ends up taking account of all his assets including this company?

These are reasons people dont bother with this approach

[northernladuk]

Can your brother bleed radiators?

[WTFH]

Hi BF, welcome.

My advice? Stick to the permanent job until you get your marriage sorted out. Contracting is a lifestyle choice and it puts strains on both the contractor and their relationships.
If you are dead set on being a contractor and dead set on getting divorced, I would suggest getting the divorce sorted first, once that is finalised then stay in your perm job for another 6 months or so, while preparing for contracting.

...and none of that advice is about the money, how you set up your ltd, or anything like that.

If you want advice purely around the financial aspect...
1. Don't set up an ltd with a family member where they own the company and you are the employee who does all the work. It will get messy.
2. Don't try to hide funds from a divorce lawyer - if they get a sniff that you're hiding something then your brother's finances could get brought in to the settlement.
3. Don't try to find a convoluted way to pay less tax by paying family members then getting them to pay you. HMRC are a bit like divorce lawyers.

[Bf1974]

Hi.

I'm now to these forums and contracting in general, so maybe a stupid question coming up as I've got a lot to learn...

I'm currently a perm, but I'm interested in going contracting. Are there any issues with setting a ltd company with my brother as the director and owner, and me as an employee? We are very close and I'm confident there would be no issues between us, but wondered if anyone had any experience or advice on this?

The reason for this is I'm in a difficult marriage, divorce is a possibility in the next couple of years and whilst I will always support my kids, my wife would try to take me to the cleaners for everything I've got - so looking for ways to protect myself and preserve the right to some kind of modest life after splitting up!

Thanks