Company structure; Ltd company or subsidiary in a company

[presidenttttt]

Hi,

I am considering starting a business. It will almost certainly be in a limited company.

I believe (especially if the first one works!!) that there is a possibility that I am the type that may start other completely different businesses subsequently.

If there is any possibility of such future endeavours is there anything I must do now to not snooker myself later on, in terms of retaining corporate structure options, and cash flow options and flexibility.

For example, if the initial company is doing well it might be logical that it is a subsidiary of a mother/group/holding company, and the profits can be passed north to the mother and then into a sister company if required.

I imagine this may all be largely irrelevant unless a company becomes very large, nevertheless it would be useful to know any “gotcha” which should be avoided in setting up a limited company if there is an expectation that further businesses may follow?

 

[lomber]

The main gotcha is to never put IP like trademarks into company property, keep these personal. That way you can emigrate and pay no tax on sale if it's an international operation( 4 year ordinary residence excluded)
The new companies should I think he independent anyway and be funded by directors loans.

 

[Brendan Burgess]

While it is reasonable to ask the question, focus your energy on getting your business up and running and profitable.

Don't set up structures now in anticipation of something which might happen in years to come or which might not happen at all.

My gut feeling is that if you have separate businesses you should have separate companies. If you then want to sell one of the companies, the CGT would be payable by you and not by the parent company.

But worry about that when you are thinking of setting up the 2nd company. Get tax advice then.

Brendan

 

[T McGibney]

While it is reasonable to ask the question, focus your energy on getting your business up and running and profitable.

Don't set up structures now in anticipation of something which might happen in years to come or which might not happen at all.

My gut feeling is that if you have separate businesses you should have separate companies. If you then want to sell one of the companies, the CGT would be payable by you and not by the parent company.

But worry about that when you are thinking of setting up the 2nd company. Get tax advice then.

Brendan

Bear in mind also that most start-up businesses fail and that the promoter's energies in the initial stages should be on keeping the wheels on the wagon and trying to avoid the pitfalls that sink many others.

 

[dublin67]

It is also possible to put a holding company on top of your trading company in the future if this is required. There are various tax reliefs there that enable a holding company to be inserted tax free. Slight bit of work but you won't have the inconvenience of a complicated structure from the start.

 

[presidenttttt]

I fully agree the focus should be on the current project, just wanted to make sure unpicking something later wouldn’t cost a fortune in unnecessary time or money, cheaper to learn from other peoples mistakes. Thanks all, I think I have the answer