How a Ltd Co buys a lease

E

Ethan 1

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Currently I have a non trading Ltd Co., I wish the Co. to purchase a lease, but as Co. has no capital and I personally do, what is the best way to proceed. All advice welcome..........
 
You should have very good reasons for this odd transaction.

But anyway, you can lend the company money and it buys the lease.

Brendan
 
Brendan. Thanks for the quick reply. I'm not sure I understand the odd transaction comment, is there any other way for a company with no assets to acquire a lease?

Could I purchase the lease myself and then lend/sell it to the company. Currently neither myself or the Company are registered for VAT (as its been non trading) I am trying to find the quickest way to proceed as I don't want this opportunity to pass me by.
 
What is the lease for? Land, property, car........?
An accountant will advise you the best way to do this.
 
Hi Demo thanks for the reply,

The lease is for a unit in a shopping Centre, Of course you are right I will be contacting my accountant in regard to this........ It's just that I would like to get more than one opinion of my options.

E1
 
Your question is too vague. Outline your plans in a bit more detail. The transaction sounds odd because you want a non-trading company to buy a lease on a property.

Do you mean that the company is not trading now, but will be shortly?

What are the amounts involved? Property should generally be bought in a person's name if there is an expectation or possibility that it might be sold at a profit.

Is there VAT on the lease purchase? If so, you will need advice on how best to reclaim that VAT.

Brendan
 
Ethan 1 said:
Currently I have a non trading Ltd Co., I wish the Co. to purchase a lease, but as Co. has no capital and I personally do, what is the best way to proceed. All advice welcome..........
Click to expand...

The co. needs cash, no questions asked, so you have two options:

1. Plug cash into the company as a directors loan - the double entry would be debit bank and credit a directors loan account in the balance sheet. The loan would simply be classed as a liability on the balance sheet, being the amount owed to you. You will need to open a bank account in the companies name to proceed. Once the company can repay the loan in x number of years you simply reverse the transaction and repay yourself. No tax implications unless interest is paid on the loan then it gets complicated.

or

2. Issue more shares to yourself, the consideration being the money you want to invest again debit bank and credit share capital. Only problem this way is that it is hard to repay share capital and not advised. Again no tax issues, you would get a tax deduction for the amount of capital issued if you sell the company

I would go with the directos loan
 
Brendan said:
Your question is too vague. Outline your plans in a bit more detail. The transaction sounds odd because you want a non-trading company to buy a lease on a property.

Do you mean that the company is not trading now, but will be shortly?

What are the amounts involved? Property should generally be bought in a person's name if there is an expectation or possibility that it might be sold at a profit.

Is there VAT on the lease purchase? If so, you will need advice on how best to reclaim that VAT.

Brendan
Click to expand...


Sorry Brendan, I should have stated my situation more precisely,

The company is currently non trading but was setup for the purpose of trading as a franchise retail outlet, the lease is €75k per annum for a 540 square feet unit, Service charges 1 Euro per sq foot/one off payment, Promo fees 1.50 Euro per sq foot/one off payment.
Yes there will be Vat chargeable on the lease.

My business plan is designed around building the business up to a certain level and then selling a majority shareholding.


By the way thanks for all the other posters

E1
 
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