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IF YOU ARE A DIRECTOR AND 40 % SHAREHOLDER

1. HOW ARE SALARIES PAID TO DIRECTORS IS THIS PAID AT THE 40 60 RATIO OR IS THE SALARIES EQUAL.

Didn't find your answer?

I BOUGHT INTO THIS BUSINESS BUT THINGS DON'T SEEM CORRECT. THIS WAS MY FIRST MONTH AND I RECEIVED 40% OF THE PROFIT OF THE SALES FOR THE MONTH,IS THIS CORRECT.  OR ARE DIRECTORS PAID SALARIES EQUAL TO EACH OTHER AND PROFIT SHARES AT END OF YEAR OR ON SAID DATE THEN SPLIT 40 / 60?

Replies (23)

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Psycho
By Wilson Philips
01st Aug 2020 20:11

There’s no need to shout. My hearing is fine.

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Replying to Wilson Philips:
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By Paul Crowley
01st Aug 2020 20:13

SAY AGAIN WILSON, COULD HARDLY HEAR YOU

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By Paul Crowley
01st Aug 2020 21:31

Have you ever been is business before? Is there a shareholders agreement? If not why not?
Recommend taking advice now on the problems of buying a minority shareholding.

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Replying to Paul Crowley:
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By Heather Akers
02nd Aug 2020 05:41

Hi Paul, no there is not one, as I bought and paid money in good faith. I guess I am the fool. I noticed no one has actually answered my question.

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RLI
By lionofludesch
01st Aug 2020 23:27

Can't find the shift key?

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Replying to lionofludesch:
Psycho
By Wilson Philips
01st Aug 2020 23:32

Oh I think she found it - but forgot to take her finger off it.

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By Heather Akers
02nd Aug 2020 05:38

Hi everyone, I apologise for the Caps on, I didn.t even realise it, until I saw the posts this morning.

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Replying to Heather Akers:
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By CS777
02nd Aug 2020 06:48

So you ignored the 'preview' your question before posting.

You ignored the fact that this is a forum for Accountants when you carried on and created a profile and asked your question, despite not being an Accountant.

Is this indicative of you in putting money into this business, ie rushing in without proper research/ due diligence.

As Wanderer states, you are not listed on companies house (I checked last night), so what paperwork was completed at the time? Was an Accountant involved? Was a solicitor? Who valued the business?

Sounds like it could have been a loan, who knows.

What paperwork did you complete/receive for the payout you received?

Why are you not talking to your Accountant now?

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By Wanderer
02nd Aug 2020 06:22

Heather Akers wrote:
IF YOU ARE A DIRECTOR AND 40 % SHAREHOLDER
1. HOW ARE SALARIES PAID TO DIRECTORS IS THIS PAID AT THE 40 60 RATIO OR IS THE SALARIES EQUAL.

I BOUGHT INTO THIS BUSINESS BUT THINGS DON'T SEEM CORRECT. THIS WAS MY FIRST MONTH AND I RECEIVED 40% OF THE PROFIT OF THE SALES FOR THE MONTH,IS THIS CORRECT.  OR ARE DIRECTORS PAID SALARIES EQUAL TO EACH OTHER AND PROFIT SHARES AT END OF YEAR OR ON SAID DATE THEN SPLIT 40 / 60?

There are no directors registered at Companies House with the name Heather Akers.

What was the agreement when you bought into the business? How much did you pay and what did the other party bring to the table?

What advice did you take / were given before buying into the business?

Heather Akers wrote:
.

Hi Paul, no there is not one, as I bought and paid money in good faith. I guess I am the fool. I noticed no one has actually answered my question.

No one has actually answered your question because there is no way of knowing if it is 'correct' without details of what's been agreed.
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Replying to Wanderer:
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By Heather Akers
02nd Aug 2020 06:39

This was an existing business owned by a friend of mine. I paid R48 000 to buy in as a 40 percent Share holder and Director. A new Trading as Name has been registered and a New Bank Account opened. Not much was discussed as I trust the person who I decided to go into Patnership with. I just feel with everything that is happening ie yesterday I reciced a Salary of 40 percentand my partner took 60 percent of the left over profit after paying Suppliers. I understood that the 40 60 split was not Salary based but dividents. I feel I am treated like a Employee as the Bank Account was opened and my Partner got a card not me even though it was discussed NO CARDS and Business banking . I only have access to the Bank Account via his log in details. Some thing seems wrong. I am a trusting person but as explained now feel there is something amiss

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Replying to Heather Akers:
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By Wanderer
02nd Aug 2020 06:48

Heather Akers wrote:

This was an existing business owned by a friend of mine. I paid R48 000 to buy in as a 40 percent Share holder and Director. A new Trading as Name has been registered and a New Bank Account opened. Not much was discussed as I trust the person who I decided to go into Patnership with. I just feel with everything that is happening ie yesterday I reciced a Salary of 40 percentand my partner took 60 percent of the left over profit after paying Suppliers. I understood that the 40 60 split was not Salary based but dividents. I feel I am treated like a Employee as the Bank Account was opened and my Partner got a card not me even though it was discussed NO CARDS and Business banking . I only have access to the Bank Account via his log in details. Some thing seems wrong. I am a trusting person but as explained now feel there is something amiss

R 48 000? Is this a SA company then? This site is mainly used by accountants with experience of UK companies.
Surely the thing to do at this time is talk through both what has happened and your expectations with your 'partner'?
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Replying to Wanderer:
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By Heather Akers
02nd Aug 2020 06:56

Yes this is SA oh sorry didn't realise. Personally I have talked and agreements are reached verbally and then my partner does whatever like and I have no say. Like yesterday on receiving Salries it was agreed x and then he took 60 percent of the profit and I was paid 40 percent.

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Replying to Heather Akers:
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By CS777
02nd Aug 2020 07:01

Sounds like an expensive lesson.

Get a solicitor.

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Replying to CS777:
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By Heather Akers
02nd Aug 2020 07:14

I am starting to realise that ...But all I want to know to satisfy my mind as its stressing me out, and I don't want to cause a breakdown in the relationship if I don't have my ducks in a row, are salaries to Directors and expenses equal no matter of the split and if I understand correctly the 40 60 profit share is a divident payout when ever its discussed ie end year?

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Replying to Heather Akers:
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By CS777
02nd Aug 2020 08:14

We are in the UK. You ar in SA. How do we in the UK know about SA law?

You say you ar a Director. Then in the next breath you mention a partnership.
Which is it?

We don't know th structure of the deal, if you have loaned the business, are an employee, if you have bought shares,what type of shares, bought into a partnership etc etc etc.

Get an Accountant/ solicitor to review the paperwork you have signed/has been produced so far.

We would be wasting time guessing, as has already been stated!! Stop wasting our time as well as yours.

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Replying to CS777:
RLI
By lionofludesch
02nd Aug 2020 08:40

CS777 wrote:

You say you are a Director. Then in the next breath you mention a partnership.

Could be the same thing in South Africa for all I know.

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Replying to Heather Akers:
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By SXGuy
02nd Aug 2020 13:05

Your first issue is you keep referring to it as a salary. It isn't. It's more likely a dividend. Which if you are a 40% shareholder would make sense that you receive 40% of it.

Why you arnt on a salary could be for a number of reasons, to which we wouldn't know the answer.

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Replying to CS777:
RLI
By lionofludesch
02nd Aug 2020 09:21

CS777 wrote:

Sounds like an expensive lesson.

R48000 is about £2200.

Could be worse.

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By SXGuy
02nd Aug 2020 07:37

You weren't paid a salary. You were paid a dividend. Please don't keep referring to it as a salary, as you are confusing things further.

There could be a number of reasons why you are not salaried, none of which we will know without more facts.

But if you are a 40% share holder then yes, you'd be given 40% dividends while your partner gets 60%.

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By Tax Dragon
02nd Aug 2020 08:08

If you put 40% of the money in and receive 40% of the profits then that doesn't sound too unfair to me, nor too expensive a lesson.

So far, anyway.

It's not clear how involved you are with the running of the business. You describe yourself as a director, but how much do you direct? From one point of view, salaries are paid for doing work, profit is received because you invest.

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By Paul Crowley
02nd Aug 2020 11:54

The real problem is that you are in South Africa and this is a British website hence the .Co.UK.
We know the UK systems but are unlikely to be experts on South Africa systems.

https://www.saica.co.za/
Try Find a member

You need an expert with local expertise

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By Calculatorboy
03rd Aug 2020 05:57

The clue is in the website name....co.uk.

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By bernard michael
03rd Aug 2020 09:10

Do the expenses you deducted before calculating the "salaries/dividends" include Corporation Tax or other tax on profits ??

If not I see trouble ahead. Find an accountant in whatever jurisdiction the business is governed by

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