Company Loan

rob290482

Hi, I have set up a Ltd company and was going to try and get it running without the need for a bank loan / using overdraft etc. I have a bit of savings and wanted to put £1000 in the business account so that i can make payments out to cover bills and stationary etc... Once the company is brining in money i want to be able to take back the £1000 tax free (already paid tax in it via PAYEE so dont want to pay it again)

Whats the best way of doing this as i don't want to have to pay tax on it when I come to withdraw it back out.

Thank you

gb12345

r!!!90482 wrote: »

Hi, I have set up a Ltd company and was going to try and get it running without the need for a bank loan / using overdraft etc. I have a bit of savings and wanted to put £1000 in the business account so that i can make payments out to cover bills and stationary etc... Once the company is brining in money i want to be able to take back the £1000 tax free (already paid tax in it via PAYEE so dont want to pay it again)

Whats the best way of doing this as i don't want to have to pay tax on it when I come to withdraw it back out.

Thank you

You will be making a loan to the company (it will be accounted for in your director's loan account), so you can take out the money you put in without paying any tax or NI on it.

rob290482

Thank you for the fast reply. Is there any special way i need to transfer the money from my private account to the business account?

Sorry about the questions but i am new to this and dont want to pay out for an accountant until some money is coming in.

Rob

gb12345

r!!!90482 wrote: »

Thank you for the fast reply. Is there any special way i need to transfer the money from my private account to the business account?

Sorry about the questions but i am new to this and dont want to pay out for an accountant until some money is coming in.

Rob

As far as I know, you just transfer it from your personal to business account as you would any payment.

It is the company's accounts that need to be correct. You would have a director's loan account, which would be shown as being £1,000 in credit (i.e. the company owes you money). Then when you take the full £1,000 back from the company in future, there would be a debit against the loan account, leaving it with a £0 balance.

Obviously, you could take the money back in stages - in which case you just debit the loan account the relevant amount.

As long as you keep track of what you put in to the company and the repayments the company makes to you and keep them seperate from any salary or dividend payments then it should be a simple job for who ever does the Co accts for that period.

rob290482

Ok thank you for your help.

If you dont mind i have 1 last question. I originally set the company up with me as a 75% shareholder and my wife as a 25% holder (both directors). The reason was that my wife was only going to be doing minor jobs and a small amount of admin work.

She was made redundant last year from her job and now need a part time/full time job. It makes sense to have her almost full time and get a bigger share of the company. I was going to give her some of my shares so its split 60/40. That will most likely represent the real work incurred by both of us.

I have downloaded the stock transfer form but not sure what needs doing with it. I also think that i dont need to sent this in to Companies House and just inform then on the end of year return.

The company isnt trading as of yet so there will be no money transfer for the shares so i shouldnt have to pay any tax/fees for transferring them.

gb12345

r!!!90482 wrote: »

Ok thank you for your help.

If you dont mind i have 1 last question. I originally set the company up with me as a 75% shareholder and my wife as a 25% holder (both directors). The reason was that my wife was only going to be doing minor jobs and a small amount of admin work.

She was made redundant last year from her job and now need a part time/full time job. It makes sense to have her almost full time and get a bigger share of the company. I was going to give her some of my shares so its split 60/40. That will most likely represent the real work incurred by both of us.

I have downloaded the stock transfer form but not sure what needs doing with it. I also think that i dont need to sent this in to Companies House and just inform then on the end of year return.

The company isnt trading as of yet so there will be no money transfer for the shares so i shouldnt have to pay any tax/fees for transferring them.

Sorry, I've not had to do a stock transfer, so I can't answer that part.

One thing to consider though is that there is no correlation between the share of the company each of you owns and the work that you do for the company. You could both own 50% of the company and your wife do absolutely no work at all and she would still be entitled to her 50% share of the dividends the company declares.

You really should speak to an accountant and get some advice on the best way of structuring the company and taking salaries to ensure that it is most tax efficient.