Sgt_Pepper
Registered User
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- 20
Hi. Feel free to move this post to the relevant section if this is not.
I’ve posted here before and found the advice given useful and accurate.
I’m self employed (year two), and it’s going very well fortunately. My wife works about 30 hours a week in the public sector now.
My father started a small business about 4 years ago, and has asked my wife and I to get involved - we did so progressively over the course of the last year. However, by choice we took no payment from him as he told us he was going to hand the business to us in 5 years. We don’t doubt he will, he’s a straight up guy and man of his word.
Its current earnings are modest, about 40k this year, but pretty impressive when you consider it’s overheads are very low and the vast majority of the 40k is earned in July and August. It's stock-based, but hire.
We collectively agreed to change the name of the business last year, which we did, and I’m now doing a few days a week driving and delivering for the business. My wife created the new website from scratch, and my father’s going to train her in on the accounts and finances in the coming few years. So although we don’t get paid anything, we invest a lot of time in it. We felt that to give the business a chance to grow, it would be best not to take a penny out of it. As we don’t need the extra income coming into the house due to having our own jobs, this is perfectly fine with us and something we suggested, not my father. Nor does he take a wage out of it. It keeps whatever it earns net, and the money is reinvested annually in the form of new stock. I'd reckon it has about 60k of stock now.
However, none of the three of us have any idea how it would affect our revenue liabilities & responsibilities going forward if my wife and I were to put out names down as directors. A brief look online at a few articles in mainstream media about inheriting a family business seem complicated and carry a lot of warnings about unexpected tax bills.
My questions:
1) Would it be best to put our names down as directors now while the business is fledgling and not earning big money. In 5 years, it could be earning 3 times that - that worries me.
2) How will it affect us as far as tax assessment and legal responsibilities go?
Thanks in advance.
I’ve posted here before and found the advice given useful and accurate.
I’m self employed (year two), and it’s going very well fortunately. My wife works about 30 hours a week in the public sector now.
My father started a small business about 4 years ago, and has asked my wife and I to get involved - we did so progressively over the course of the last year. However, by choice we took no payment from him as he told us he was going to hand the business to us in 5 years. We don’t doubt he will, he’s a straight up guy and man of his word.
Its current earnings are modest, about 40k this year, but pretty impressive when you consider it’s overheads are very low and the vast majority of the 40k is earned in July and August. It's stock-based, but hire.
We collectively agreed to change the name of the business last year, which we did, and I’m now doing a few days a week driving and delivering for the business. My wife created the new website from scratch, and my father’s going to train her in on the accounts and finances in the coming few years. So although we don’t get paid anything, we invest a lot of time in it. We felt that to give the business a chance to grow, it would be best not to take a penny out of it. As we don’t need the extra income coming into the house due to having our own jobs, this is perfectly fine with us and something we suggested, not my father. Nor does he take a wage out of it. It keeps whatever it earns net, and the money is reinvested annually in the form of new stock. I'd reckon it has about 60k of stock now.
However, none of the three of us have any idea how it would affect our revenue liabilities & responsibilities going forward if my wife and I were to put out names down as directors. A brief look online at a few articles in mainstream media about inheriting a family business seem complicated and carry a lot of warnings about unexpected tax bills.
My questions:
1) Would it be best to put our names down as directors now while the business is fledgling and not earning big money. In 5 years, it could be earning 3 times that - that worries me.
2) How will it affect us as far as tax assessment and legal responsibilities go?
Thanks in advance.
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