Can my company invest in a new start up

Can my company invest in a new start up

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Hi,
I have an existing it company and we are expanding into a new area. The current company is owed by two people with a 50/50 share split.
We approached a friend with a good sales track record to see if he would be interested in working for us and running / creating a sales team. He has come back with a yes but is also interested in more, in essence he wants to become a shareholder.
Both myself and my co director don't want to give up any of the existing company so we are considering starting a new company that our existing one is a share holder if as well as the new guy.
Our existing company will use its cash to buy the shares so it becomes a share holder, which in essence we already own so will benefit from dividends later down the road. I presume this is possible.

If so is the investment into the new company tax deductible as far as the existing company is concerned. We won't want the money back unless the new company is closed or sold.

If anyone has a better idea to structure something I'm all ears.
Thanks

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By andy4151
10th Sep 2014 20:27

Investment is not deductible.
You will account for it as an investment. An impairment review should be made annually to make sure it is held at the correct value. The investment impairment will not be tax deductible

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