Opening a limited company

drifter17a

All,

I have decided to open a take away business with a friend of mine.

We have registered the takeaway as owned by a limited company and both of us being its directors with equal share.

Do you guys see an issue with this in general?

I know if your rate is below 15k then you are exempt from business rate.
Does that also apply to limited companies?

Savvy_Sue

Get an accountant if you're running a limited company.

The issue with owning in equal shares is what if you can't agree about something: you have a deadlock. I'm sure it's all sweetness and light now, but if something goes wrong and you can't agree what to do about it, you're a bit stuck.

I'm afraid I have no idea what your last paragraph means.

drifter17a

rephrased it

I know if your business rate is below 15k then you are exempt from business rate.
Does that also apply to limited companies or individuals?

https://www.gov.uk/apply-for-business-rate-relief

aife

drifter17a wrote: »

rephrased it

I know if your business rate is below 15k then you are exempt from business rate.
Does that also apply to limited companies or individuals?

https://www.gov.uk/apply-for-business-rate-relief

..if the rateable value of your property is below 15 k you can claim small business relief

Malthusian

Savvy_Sue wrote: »

The issue with owning in equal shares is what if you can't agree about something: you have a deadlock.

On the other hand the OP telling his partner that he wants 51% so that decisions can be made even if they fall out is probably going to bring forward said deadlock immediately.

Pennywise

Malthusian wrote: »

On the other hand the OP telling his partner that he wants 51% so that decisions can be made even if they fall out is probably going to bring forward said deadlock immediately.

Surely it's better to sort it out from the outset so that everyone knows where they stand? Otherwise you waste your time, money and effort building up a business which then falls apart when the inevitable "control" question arises. A proper shareholders agreement is pretty much essential when large amounts of cash and peoples' livelihoods are at stake, to cover eventualities such as how much work each is expected to do, how they are paid for their work, what happens if one wants to sell and the other doesn't etc.

Savvy_Sue

Malthusian wrote: »

On the other hand the OP telling his partner that he wants 51% so that decisions can be made even if they fall out is probably going to bring forward said deadlock immediately.

Well true, but he might be willing to settle for 49%! And ...

Pennywise wrote: »

Surely it's better to sort it out from the outset so that everyone knows where they stand? Otherwise you waste your time, money and effort building up a business which then falls apart when the inevitable "control" question arises. A proper shareholders agreement is pretty much essential when large amounts of cash and peoples' livelihoods are at stake, to cover eventualities such as how much work each is expected to do, how they are paid for their work, what happens if one wants to sell and the other doesn't etc.

things like this. And even if the intention is that each does an equal amount of work, what if one of them or their partner becomes ill or pregnant, or some other major life change hits them?

drifter17a

company registered and excempt from paying business rate.

What I am thinking is to draft an agreement which is simple and says we both own 50% of the business and get it signed by both and witnesses and signed by 3 people.

Savvy_Sue

What can possibly go wrong? Ah yes, everything we said in posts 2 and 6.

You can have it signed by the Queen of Sheba if you like, but if it does not cover the not so simple things of what if one of you wants out, what if one of you is unwell and can't work as hard as the other, what if ... then it's worthless.

And as long as you insist on 50%, then how are you going to settle any disagreements?

Potbellypig

Savvy_Sue wrote: »

What can possibly go wrong? Ah yes, everything we said in posts 2 and 6.

You can have it signed by the Queen of Sheba if you like, but if it does not cover the not so simple things of what if one of you wants out, what if one of you is unwell and can't work as hard as the other, what if ... then it's worthless.

And as long as you insist on 50%, then how are you going to settle any disagreements?

Nobody in their right mind is giving up that extra % so the other person can have the final say. Doing it 50/50 is the best way in this instance.

Savvy_Sue

It's a little more than the 50/50, although I still think that is quite important.

Not thinking through the What If questions and not making agreements about those situations at this stage is really short-sighted. Waiting until there's trouble brewing - or more often well-brewed - is disastrous.