Hello
We've just had an offer accepted to purchase the assets of an unincorporated hair salon. We've instructed a solicitor and accountant but I wanted to sense check before registering the company and I'd welcome any and all advice!?!
We've decided to setup a new limited company both for personal protection and tax purposes. I'm a higher rate tax payer (£50k) and my wife is lower rate but due to finish work in September (she's preggers with our second :-)
We'll be doing roughly 50/50 work in terms of marketing, bookkeeping etc. as there's a salon manager in situ. I don't plan on drawing income from the business as we've no need. We're hopeful of achieving a net profit of circa £15-20k per annum.
I'm assuming the best structure would be two have both of us as directors for day-to-day practical purposes (banking, buying stock, expenses etc.) with my wife 100% shareholder so we can pay her a salary and dividends into her account.
Does this sound reasonable?
Thanks in advance for your thoughts
Replies (11)
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That is exactly the kind of advice that you should expect from your own accountant.
All I would say is - it’s not all about tax.
It doesn't sound unreasonable.
I would divide the share capital into A and B shares and whilst there are tax free dividends available you could have some and still own half the company.
But I've made assumptions about your scenario and your accountant will be better placed to advise.
What is your point? The OP says they would not take an income but the above poster suggested taking a dividend to use the dividend allowance. I was advising against this since this would bring the OP's income over £50k and the loss of child benefit for 2 kids could be higher than the tax saved so what do you think I have missed? The OP has probably got it right in not taking any money.
Depends how accurate that £50k is. An extra £2k in the taper zone probably won't make a lot of difference.
He has said £50k so if you assume that any dividends would fall within the £50k to £60k range then he would have to pay back child benefit of £350 but (as a couple) only save tax of £150.
You haven't missed anything. I missed the fact (didn't read your post properly) that you were responding to another poster and not to the OP.
Nobody is perfect :¬)
It doesn't sound unreasonable, but as someone else said. You should speak to your accountant about it.
Structuring a business in the correct form can be a 5-10 minute conversation if your accountant knows your affairs well already, yet if you get it wrong it will cost you thousands.