What can be purchased using Ltd Co funds?

Papes

I'm going to set up a Ltd company soon with me as the sole director and shareholder. It will be my personal company with no employees, which I will use to offer my services which include web development and music production.

I assume that if I needed a new laptop for example, then there'd be no problem with using the company's debit/credit card. Basically anything related to the running of the company and the services I offer.

My question is, what else can I purchase using company funds. Can I go out and buy myself a new TV or anything else which is not going to be used or needed by the company?

The reason I just thought of this is because if this was allowed, then buying things using the company's money would obviously lower the company's tax bill at the end of the year. I mean, if I'm going to buy these things anyway, then why not just charge it to the company, which remember is really a "personal company" with no other shareholders or employees.

stamford

Papes wrote: »

I'm going to set up a Ltd company soon with me as the sole director and shareholder. It will be my personal company with no employees, which I will use to offer my services which include web development and music production.

I assume that if I needed a new laptop for example, then there'd be no problem with using the company's debit/credit card. Basically anything related to the running of the company and the services I offer.

My question is, what else can I purchase using company funds. Can I go out and buy myself a new TV or anything else which is not going to be used or needed by the company?

The reason I just thought of this is because if this was allowed, then buying things using the company's money would obviously lower the company's tax bill at the end of the year. I mean, if I'm going to buy these things anyway, then why not just charge it to the company, which remember is really a "personal company" with no other shareholders or employees.

Speak to your Accountant don't rely on anything you may here on this Forum - it's you or your One Man Limited Company's tax bill that is at stake here.

imoneyop

As stamford says speak to your accountant for definite advice.

However, even though the company is effectively you - it is a separate legal entity and I think you might find that at the very least anything personal that you buy through the company might end up as being treated as a benefit in kind and therefore be taxable to you personally.

At the worst, you might be accused of tax evasion.

DKLS

Ask your accountant for tax avoidance tips, perfectly legitimate business practice.

Slinky

One word of advice on the purchase of your laptop, ask your accountant if you can buy it as a personal expense then claim it back through the company. Reason I say this is when I set up my company I bought my Evesham laptop and had my company name on the invoice. It turned out to be a dog of a machine with the hard drive failing 3 times in 18 months and it spending 3 months out of action in that time. I found out to my cost there is much less protection to the consumer if the consumer is a business rather than a personal customer. If I'd have bought it myself and claimed it back as a company expense I'd probably have managed to get my money back as it was unfit for purpose and I'd have gone after the credit card people as well. As it was, I spent hours on the phone, sent several letters, got no joy at all and in the end gave up as a waste of my time trying to pursue my wasted £1500.

heleen

Basically comapny expenses are just that - things to do with the company. Dont' confuse it with personal items. However, there are some items that you can expense to your company, e.g. I charge rent (£100) to myself for use of study, share of braodband etc.

Also tehre are little things like you can have a Xmas party, whcih basically means you can go to dinner with the Mrs for £150 and it's deductible :T

Timmne

As imoneyop says, the business is a separate entity to you. You being its only shareholder has no relevance to what you spend the money on...

Remember that if you want something for yourself the money in the company belongs to the company until released via salary or dividend. If your director's account goes overdrawn in the year you're facing issues of benefits in kind, which you'll be charged NI on (class 1a).

keep it simple. if you want something, either pay yourself through your payroll and buy it or pay it through your director's account and issue yourself a dividend (bearing in mind this needs to be backed up by board minutes and dividend vouchers and only issued if the company has enough retained profits to absorb the dividends).

If you need any advice please ask - although you really should go and get yourself an accountant sooner rather than later. Any good accountant will save you at least as much in tax as they charge you for doing so.

Too many people (and I'm not pointing at OP!) just go and start a Ltd co without considering the compliance and admin issues first - like most of my new 'in a mess' clients!