How do I get my startup money for business back?

V

vicar

Guest
Hi Guys,
Starting a business with a friend (partnership not Ltd Co.) We are both putting in an equal amount of money from our savings into a business account to start purchasing some stock. We have registered the name etc. What I want to know is how do we get the initial startup money back once (hopefully) the business starts to generate some dough. Is is taxed? how is is treated? Can we just write ourselves a cheque and treat it as retuen on startup costs?
Any help would be appreciated.
Thanks
V
 
J

jem

Guest
Assuming that you have just one €1 share each the balance would be a loan from directors to the company. this money can then be repaid to the directors tax free at any stage (without interest) assuming the business can afford it.
 
V

vicar

Guest
getting capital back

Thanks Jem,
We are 50/50 partners so what does the €1 share mean?
 

Brendan Burgess

Founder
Messages
40,231
Re: getting capital back

Hi vicar

jem must have misread your post and thought it was a company.

You will put your initial capital into a capital account. When you have cash, you will be able to refund it to yourselves free of tax.

You will only pay tax on your profits and not on the money you take out or leave in.

Brendan
 
J

jem

Guest
Re: getting capital back

jem must have misread your post and thought it was a company
correct sorry.
You will only pay tax on your profits and not on the money you take out or leave in.
correct.
In fact you can take out more than u put in without it having relevence to your tax
 
V

vicar

Guest
getting capital back

Thanks Brendan and Jem,
Great website and thanks for all your help, you really should rename website www.allyourquestionsanswered.com because I have never been left without an answer!!
one more thing Jem, you said you can take out more than you put in without relevance to tax..what do you mean? I would take it that if I put 10K of my own money in as startup capital then I can only take this amount out when the partnership starts to make a few bob? Is this true? I'm a bit unsure about the whole tax issue when it comes to a partnership (not ltd co) especially as the two of us will be doing this as a part time venture at first and keeping our main jobs until (hopefully) it can sustain us in the near future.I dont find the revenue website too helpful when it comes to this topic as we dont want to take a wage out of this venture
thanks again
V
 
J

jem

Guest
Re: getting capital back

Hi,
Being self-employed either as a partnership or a sole trader(not a Ltd. company) u will pay tax on your profits, it the case of a partnership share of profits. Drawings- what you take out has no relevence to this. I ofton give the following example:
U set up in buisness, your sales are €1000and have expenses of €1000, u take out €2000 to live on(drawings) and run up an overdraft of €2000.
You have no profit - the sales and expenses balance out.
the drawings came from overdraft. You pay no tax.
example 2.
sales €10000, expenses €5000 , drawings €2000
your profit is 10000-5000= 5000 you pay tax(less allowances ) on the €5k.

BY the way: I would strongly advise that you would get a solicitor to draw up a detailed partnership agreement, it will save a major amount of hassel later. In fact I will not take on a partnership case unless they get one drawn up and sign it.This generally forces their hand to do so.

I would realy sugest that you would get an accountant to help you with your buisness.
 
Top