I work for a start-up that doesn't yet generate any revenue and currently finances its operations through funds received by various shareholders of the company.
Director 1 = is now a minority shareholder but when the company first started held no shares in it, just the director title on Companies House (not sure if that makes a difference at all?). Since the company started, Direcor 1 has been invoicing a monthly fee (via his own limited company) plus expenses (if there were any for that particular month). We always paid his invoice like we did for all the other advisors / contractors.
Direcor 2 = majority shareholder who used to be the sole shareholder of the company & now still owns the majority for the company. Has been working for free but now wants to start reclaiming business expenses (not historic, recent expenses).
1. Have we incorrectly treated the fees & expenses of Direcor 1 - should we have applied for 'employer' status and paid Director 1 a salary? OR should we have applied for an 'exemption'? OR have we treated his invoices correctly as Director 1 has its own Limited Company where these invoices originated from?
2. How do we treat the expenses of Director 2? Do we just add them to an expense form & then pay him? Do they need to be added to a DLA until we pay them out? Do we then need to treat both directors in the same way?
Thank you so much for your time in reading this and helping me work this out.